Btec Unit 3 Business Finance

Leasing would be the most appropriate way to finance the purchase of:

• Inventories

• Company cars

• Trade receivables

• Advertising campaigns

A reduction in the quantity or value of inventories held would normally:

• Improve cash flow

• Worsen cash flow

• Increase operating profit

• Reduce fixed costs

Which of the following would NOT be an example of a cash inflow:

• Capital introduced

• Sale of assets

• Bank interest received

• Discounts allowed

Which of these formulae defines the point at which breakeven output is achieved?

• Total Costs = Total Contribution

• Total Revenue = Total Price

• Total Profit = Total Costs

• Total Revenue = Total Costs

Which of the following best describes a fixed cost?

• A cost which has a direct relationship with output

• A fixed proportion of total costs

• A cost which remains constant irrespective of output

• A cost which decreases proportionately with output

Which one of these actions would be MOST likely to improve contribution per unit?

• Lower raw materials costs

• Higher marketing spending

• Higher discounts offered to customers

• Lower rent costs

Short-term cash flow can be improved by:

• Increasing the value of finished goods inventories

• Extending the period of credit taken from suppliers

• Cutting the gross profit margin

• Repaying a long-term bank loan

Which of the following is an internal source of business finance?

• Trade credit

• Bank overdraft

• Retained profit

• Leasing

What does a statement of financial position show?

• The profit made by a business over a period of time

• The liquidity position of a business over a period of time

• The loss made by a business at a point in time

• The value of a business at a point in time

A specialist wedding cake baker's fixed costs are £7,000 per month. It sells cakes at a price of £57 per cake & the variable cost per cake is £22. What is the break-even level of output and sales each month?

• 150 cakes

• 200 cakes

• 250 cakes

• 500 cakes