Commerce 2015 Jamb Examination

External environmental factors refer to the conditions outside the business that can influence its operations and decisions. These include economic trends, social norms and expectations, and legal regulations. Understanding these helps a business adapt to external changes and mitigate risks.

A private limited liability company cannot offer its shares to the general public and usually has restrictions on the transfer of shares. In contrast, a public company can raise capital by offering shares to the public on the stock exchange.

Debentures are long-term debt instruments issued by companies to raise capital. They carry a fixed rate of interest and may be redeemable (paid back after a certain period) or irredeemable. Debenture holders are creditors, not owners, of the company.

Circulating capital (or working capital) consists of current assets used in daily operations, including cash for transactions, work-in-progress for production, and debtors representing amounts owed by customers. Fixed assets like vehicles and land are not part of circulating capital.

The authorized share capital is the maximum capital a company is allowed to raise by issuing shares. Mammy Plc has 5,000,000 shares at 50K each. Converting: 5,000,000 × 0.5 = N2,500,000. This is the total nominal value allowed to be issued; the portion offered to the public or realized does not affect the authorized capital.

An irredeemable bond (also called a perpetual bond) pays interest indefinitely but does not repay the principal capital. In contrast, a redeemable bond repays both principal and interest at maturity. This distinction is important for investors seeking long-term income versus capital repayment.

A dock warrant is a receipt issued by the port or warehouse authority acknowledging the deposit of goods. It serves as evidence of the right to claim or transfer ownership of the goods stored in the port or warehouse.

The demographic environment studies statistical characteristics of the human population such as age, gender, ethnicity, education level, and income. Businesses use this information to tailor products, marketing strategies, and services to meet the needs of specific consumer groups.

In trade credit terms, "4 net 7" means that the buyer is entitled to a 4% discount if payment is made within seven days. This incentivizes early payment and improves the seller’s cash flow.

This is an example of vertical integration, where a single business controls multiple stages of production and distribution within the same industry. Musa controls the entire chain from raw material (wool) to finished product (cloth) and sells directly to consumers.