Unit 3 Revision Quiz

What is the primary objective of a business in its startup phase?

• Maximize profit

• Survive in the market

• Expand internationally

• Diversify product range

Which of the following is a financial aim commonly pursued by new businesses?

• Enhancing brand reputation

• Achieving a positive cash flow

• Reducing employee turnover

• Increasing market share

What does 'break-even point' refer to in business?

• When total revenue equals total costs

• When a business starts making a profit

• When fixed costs are recovered

• When variable costs exceed fixed costs

Which formula correctly calculates profit?

• Total Revenue - Total Costs

• Total Revenue - Fixed Costs

• Total Revenue - Variable Costs

• Total Revenue + Total Costs

Why is cash flow forecasting important for a new business?

• It predicts future sales volumes

• It ensures there is enough cash to meet obligations

• It determines the break-even point

• It calculates annual profit

What is considered a short-term source of finance?

• Bank loan

• Mortgage

• Trade credit

• Share capital

Which of the following is an advantage of using retained profit as a source of finance?

• No interest payments

• Immediate availability

• Does not dilute ownership

• All of the above

What is the main disadvantage of using overdrafts for financing?

• High interest rates

• Loss of ownership

• Fixed repayment schedule

• Requires collateral

Which factor is most likely to influence a business's pricing strategy?

• The color of the product

• Competitor prices

• Employee wages

• Office location

What does 'margin of safety' indicate in break-even analysis?

• The amount by which sales can drop before the business reaches break-even

• The difference between total revenue and total costs

• The level of sales needed to achieve a target profit

• The buffer stock level required for production