Types & sources of business finance

Which of the following is a method of sales promotion?

Which of the following is an example of an ethical objective?

In the product life cycle shown, what is the name of stage 2?

Which of the following is likely to occur if a business does not follow employment laws?

Which of the following is a feature of price penetration?

Which of the following is included in the average rate of return (ARR) formula?

Identify two ways a business might solve its cash flow problems.

Explain one reason why a business would choose a newspaper as a method of advertisement.

Identify one extension strategy a business can use and explain how it can increase sales.

Explain one advantage of using retained profits as a source of business finance.

Use the break-even chart below to calculate the margin of safety if the actual number of units sold was 60.

Show all workings.

State and explain two factors that influence pricing decisions for a business.

Which of the following is a method of secondary market research?

Which of the following describes dividing potential customers into groups based on different characteristics?

Which source of finance could be given to a business to create jobs in areas of high unemployment?

Which of the following is the correct formula to calculate the margin of safety from a break-even chart?

Which of the following types of business ownership has shareholders, but cannot advertise its shares to the general public?

Which of the following is an advantage of trade credit for a business?

Identify two factors a business will consider before deciding on the promotional mix for its product or service.

Shareholders have a key objective of profit.

Explain one reason why this might cause conflict with a different stakeholder group.

Explain one problem a business might face when producing an effective business plan.

Explain one benefit to a business of being more environmentally friendly.

Table 1 Extract from an income statement

Using Table 1, calculate the gross profit margin.

Show all workings.

State and explain two pricing methods that a business can use.

Item A: One Day Photography

Describe what is meant by the term ‘entrepreneur’.

Debbie previously worked full time from 10am to 6pm in a supermarket.

Analyse one benefit to Debbie of operating ODP as a sole trader.

Debbie is spending many hours a week updating the ODP social media account and responding to messages.

Recommend whether Debbie should continue to use social media to promote ODP.

Give reasons for your answer.

Item B: One Day Photography

Identify one current asset of a business.

Explain why a unique selling point (USP) is important to a business.

Debbie charges £180 for a family photography session. The cost to ODP for each session is £60.

Using the information in Table 2, calculate how many sessions Debbie would need each week to equal the profit from two weddings.

Show all workings.

Debbie is considering a bank loan to open a studio and upgrade her camera equipment, but she would have to use her home as security. This means that if she struggled to repay the loan the bank could force her to sell the house.

Recommend whether Debbie should use a bank loan.

Give reasons for your answer.

Identify two stakeholders of a business.

Using Item A, explain one disadvantage to Ellie of using money borrowed from her parents to set up Swiftly Services.

Using Table 2, calculate the closing balance for May on the cash flow forecast.

State the formula for the closing balance and show your workings.

Ellie is considering offering gardening services in June, July and August.

Recommend whether offering gardening services will improve the long-term future cash flow at Swiftly Services. Give reasons for your recommendation.

Item B: Swiftly Services

Ellie estimates that her weekly revenue from the gardening services will be £1320. Cost of goods sold, eg plants, will be £528. Other expenses are £396.

Calculate the gross profit margin for the gardening services.

Ellie is planning to segment her market and focus on families with children.

Analyse one benefit for Swiftly Services of using segmentation in a competitive market.

Ellie is considering using professionally printed leaflets to promote the new gardening services. It will cost 15p to print a colour leaflet. The minimum order is 2000 leaflets.

Recommend whether Ellie should use leaflets to promote the new gardening services. Give reasons for your recommendation.

Item C: BEco Bottle

Explain one characteristic of the growth stage of the product life cycle.

Using Item C, explain one type of economy of scale that might benefit Jake’s

Jake used the Internet to collect secondary market research for his business plan.

Analyse one disadvantage of Jake using the information he gathered from his Internet

Item D: BEco Bottles

Jake is considering changing his pricing strategy from price skimming to competitive

Analyse one benefit for Jake’s business of using a competitive pricing strategy.

Figure 1 BEco Bottle break-even chart at current selling price

To remain competitive, Jake has reduced the price of the BEco Bottle. At this new price, the level of sales and his costs remain the same. If Jake sells 5000 bottles, total revenue falls from £90 000 to £75 000.

Using Figure 1, calculate the fall in profit as a percentage if Jake sells 5000 bottles at the new lower price.

State the formula for net profit and show your workings.

Item E: BEco Bottle

Jake wants to target a new BEco Bottle at sports people and needs to increase production. He is considering two options to achieve this:

• outsource production of the sports bottle to India

• use hire purchase to buy the new equipment to manufacture the sports bottle in his existing factory.

Analyse the effect of each of these two options for the business.

Evaluate which of these two options will have the bigger impact on the future success of the sports bottle.

Which element of the marketing mix involves selecting a channel of distribution?

Which source of finance is available to a limited company but not a sole trader?

Which pricing method involves calculating the costs of production and adding a percentage to make a profit?

What is the name for the category of products in the Boston Matrix labelled X below?

Which method of growth involves employing another business to produce products or provide services?

Which of the following would be on a statement of financial position?

Explain what is meant by the term ‘economies of scale’.

Identify two ways business activity can have an impact on the environment.

Way 1

Way 2

Explain one way a business can minimise risk.

Explain one way that promoting a good or service can increase sales.

Use the break-even chart below to calculate the margin of safety in units if the actual number of units sold was 700.

Show all workings.

State and explain two extension strategies that can extend the life cycle of a product.