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Transcription of this question: 4.AFA was ata critical point. Sam and Finn had not fully resolved their disagreements. Theyseemed to be constantly arguing but Sam could also see that new issues were emerging. Attheir most recent meeting in early 2018, Finn provided the following financial information toillustrate the declining trend in gross profit margin.Table 1: Selected financial information for AFAYear20162017Gross profit142888124211Sales revenue21644862400625In addition, the recruitment of new staff was becoming a problem, as the wages that AFAoffered were much lower than fair trade competitors. In a meeting between Sam and Finn,they argued over the best way to financially reward and motivate newly recruited workers,given the lower wages paid by AFAFinn argued for a reward system based on fringe payments (perks), as this was beingoffered by AFA’s main competitors, the supermarkets. Sam countered that AFA should forma cooperative involving all physical stores. He argued that creating a worker cooperativecould give all members a sense of community and fulfillment and motivate them so thatall members of the cooperative would benefit. There would also be additional stakeholderbenefits. Finn argued that a worker cooperative was too difficult to organize and operate andwould not solve the problem of recruiting staff.In the meantime, AFA was continuing to attract a good deal of publicity. Sam had appearedon a national television show about young, innovative entrepreneurs. After the televisionshow ended, one very large international retailer with a strong online presence contactedSam about the possibility of a takeover. Sam initially refused, but as the details of thetakeover became clear he started to seriously consider the opportunity. By selling thebusiness Sam would have enough fresh capital to start new, innovative businesses andmake some of his other visions and ideas into reality. In addition to the corporate socialresponsibility (CSR) AFA was generating, the takeover would give AFA access to otherintangible assets. However, the international retailer had indicated that it could not guaranteekeeping all existing and newly recruited employees and managers. Finn and Kim were bothvery worried that Sam would even contemplate the takeover, which they felt was an act ofbetrayal to all the stakeholders of AFA(a)(c)(d)Define the term intangible asset.(i) Calculate the gross profit margin of AFA for 2016 and 2017.(ii) Explain one possible reason for the trend in gross profit margin for AFA between2016 and 2017.Explain one benefit and one cost to AFA of using fringe payments (perks) to financiallyreward staff.Discuss whether Sam should accept the offer of a takeover.[2][2][2][10]

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