Worksheets1.3 Putting a business idea into practice (website)
Total questions: 56
Worksheet time: 55mins
What does "specific' mean
A type of profit after taxation
An element that makes an objective SMART
One of the stakeholders of a business
A long term strategic aim
What is an aim
Ensuring the business hits its target
A type of business ownership
A general statement of where the business is heading
A member of business segmentation
What is an objective
A clear goal that is measurable, so success or failure is clear to see
Internal promotion of a middle manager to a more senior position
A general statement of where the business is heading
Always focused on keeping the business going and maintaining it as a going concern
Which of the following is a SMART financial objective
An increase in market share
The creation of a successful marketing campaign that increases sales
Increasing profit levels by 5% over 3 years
Increasing the number of children that survive malaria in Africa by 10%
How many new businesses survive the first year of trading
100%
90%
40%
10%
How many new businesses survive 5 years of trading
100%
90%
40%
10%
What is market share
The sale of stocks and shares in a market
The mark-up on cost that the firm makes on the sale of its products
The percentage of a market held by one company of brand
The amount of a company owned by a shareholder
which of the following is a non-financial objective
Reducing overall total costs by 7% over the next 3 years
Becoming independent and not having to report to line managers
An increase in revenue in the future
Improving market share within an Asian market by 18% by 2019
Which of the following is not part of the mnemonic SMART (objectives)
Measurable
Specific
Realistic
Actual
Which of the following is NOT a financial objective
Profit
Sales
Independence
Market share
Which of the following best describes a social enterprise
It does not have a legal right to make a profit
It reinvests any profits in good causes
Which of the following businesses is most likely to have a social objective in addition to financial objectives
Dyson
Apple
Body Shop
Which two of the following would be businesslike objectives for starting a socially minded sports club
To gain a sense of achievement by creating something to be proud of
To build a business strong enough to be sold for a lot of money
To break-even within the first two years
To find a way to franchise the business
To make the cumulative position of the club as high as possible
Raj and Abdul have set some objectives for Party Goers Ltd.
Which oneof the following is a non-financial objective?
Select oneanswer.
Revenue maximisation
Personal satisfaction
Profit maximisation
Improve cash flow
Connie had a number of objectives when deciding to start her own business.
Identify two non-financial objectives when starting a business.
Select twoanswers:
Personal satisfaction
Earn a high profit
Financial security
Provide a challenge
Increase personal wealth
Which threeof the following are examples of risks which increase the chance of a new business failing in its first year?
Select threeanswers:
Net cash flow turns out to be negative
The bank increases interest rates on business loans
There is less competition than expected in the local area
There are more potential customers than market research suggested
There is a downturn in economic activity
What is the formula for total costs
Fixed costs x variable costs
Variable costs x quantity produced
Fixed costs + variable costs
Price x quantity sold
What is the formula for total revenue
Price x quantity produced
Variable costs x quantity produced
Fixed costs + variable costs
Price x quantity sold
Variable costs include
Advertising
Management salaries
The cost of rent to the landowner
Raw materials
What is the formula for profit
Price x quantity produced
Price - variable costs
Fixed costs + variable costs
Total revenue - total costs
Fixed costs include
Raw materials
Loan repayments to the bank
Wage costs
The cost of packaging
A small manufacturing company has variable costs.
Which threeof the following are examples of variable costs?
Select threeanswers
Packaging
Insurance premiums
Raw materials
Wages
Loan repayments
WedgeWellyhas many variable costs when running the business.
Which oneof the following is an example of a variable cost?
Select oneanswer.
Loan repayments
Salaries
Insurance
Raw materials
A business has the following revenue information over a six-month period.
Which one of the following is an example of calculated risk for the owner of this business?
Select one answer.
Revenue increases by 400% between July and December
Revenue in July is 30% lower than in December
There is a 25% chance of profits falling in the next six months
Variable costs increase by 40%
What is interest
The extent to which stakeholders are concerned about the business
The charges made by banks for the cash they have lent to a business
The total value of sales made within a period of time
All the costs for a period of time such as a month
What is break-even
Where a business is making its target profit levels
Fixed costs / (price - total revenue)
The total cost of production, even when the business is not making any items of produce
The level of sales at which total costs = total revenue
What is the total profit that Northern Coffee Merchants Ltd made between January and June
£4,500
£9,500
£10,500
£12,000
FJP Ltdmanufactures high-quality office chairs. The chart below shows financial information for FJP Ltdin 2016.
Which twoconclusions can be drawn from the bar chart?
In 2016 FJP Ltd:
Select two answers.
made a loss of £75 000
made a profit of £60 000
made a loss of £310 000
had a cash inflow of £370 000
had total costs of £540 000
Brownlow is a business that builds water features for gardens. It has recently experienced a fall in sales. Which two of the following might explain this fall in sales
Weather has been poor over the last few months
The cost of raw materials has fallen
Interest rates may have fallen
Improved staff training programme
Gardens are smaller and have no available space
A business has the following revenue information over a six-month period.
Which two of the following are the most likely explanations for the changes in revenue?
Select two answers.
A rise in profits
The product being seasonal
A successful advertising campaign
A new competitor entering the market
An increase in variable costs
Which threeof the following are fixed costs of a manufacturing business?
Select threeanswers:
Salaries of managers
Packaging for products
Marketing costs
Parts and components
Interest on a bank loan
What is the formula for break-even
(Price x quantity sold) - total costs
Fixed costs / (price - total revenue)
Fixed costs / (price - variable costs)
Variable costs / (price - fixed costs)
What is the margin of safety
A chart showing a company's revenue and total costs
Sales revenue - variable costs
Where the business ensures that it meets the latest health and safety legislation issued by government
The amount by which demand can fall before the business starts making losses
If a business is making zero profit, it is said to be
Making a loss
Failing to achieve its objectives
Breaking-even
Covering its variable costs only
Brownlow is a business that builds water features for gardens. It has recently experienced a fall in sales and records the following transactions between Jan and April 2015:
Money paid to Brownlow by its customers £5,000
Money owed to Brownlow by its customers £10,000
Cash outflow £70,000
What is the most likely outcome based on this information
Growth
Insolvency
Expansion
Investment
Closing balance
The proportion of. businesses cash stocks that are kept in the bank
The amount of cash left in the bank at the end of the month
The assets of the firm at the point that is ceases trading as a business
Cash in to the business minus cash out of the business
Identify two likely impacts for the owners of Northern Coffee Merchants Ltd as a result of the information shown in the graph above.
Select twoanswers:
Money will be available to reinvest in the business
Greater risk of losing personal possessions
More difficult to pay suppliers
Less risk of insolvency
Higher rate of Value Added Tax
Opening balance
The cash left in the account at the end of the month
The level of stock before anything else is sold
The amount of cash in the bank at the start of the month
The initial deposit made into a bank when the account is opened
Net cash flow
Cash in minus cash out - over a month
Gross cash flow minus depreciation
Annual profits minus variable costs
The annual average rate of return
Lee is considering operating his fishing business in a different location when the summer is over. He has produced a cash flow forecast to include in his business plan for a loan.
Which three of the following might be the reasons why Lee produced a cash flow forecast?
Select three answers.
It is a legal requirement that a business should have a cash flow forecast
It can help a bank decide whether it should lend money to a business
A cash flow forecast ensures that the business will be successful
Cash flow forecasts can reduce the risk of business failure
To identify if the business will require an overdraft
These are the monthly cash flow figures for a business:
Opening balance £10000
Cash inflow £14,000
Cash outflow £28,000
What is the closing balance for the business at the end of the month
-£14,000
-£4,000
£24,000
£38,000
Share capital
An overdraft facility that the bank provides to a business
Raising finance by selling part-ownership in the business
The market share the business has
The market price of the business's shares
Retained profit
The profit margins on products sold to customers
The profit kept within the business and the best source of finance for expansion
The profit of a business expressed as a percentage of sales revenue
The profit before dividends are paid to shareholders
Trade credit
When a supplier provides goods, but is willing to wait to be paid
A method of payment operated by VISA
A loan by the bank to a firm
A positive net cash flow into the business
Personal savings
The costs saving made by reducing the level of expenditure by employing more productive staff
The private and individual amount of saving that the owner of the business or another interested party might have to fund business activities
The ability to limit the costs on raw materials and other variable costs
A reduction in the level of dividends paid to shareholders throughout the year
Which of the following lists only includes long-term sources of finance
Share capital, credit from suppliers and venture capital
Personal savings, bank loans and crowd funding
Bank loan, retained profit and bank overdraft
Overdraft, trade credit and crowd funding
Dividends
The proportion of a business that is owned by the banks
A proportion of sales revenue paid to shareholders
The market share that the business commands
Payments to shareholders fro the firm's yearly profits
Which one of the following is a short-term source of finance for a business
A bank loan over 10 years
Personal savings
Crowd funding
Trade credit
Venture capital
The money gained from debtors once they repay their debts
Capital from adventurous sources
A combination of share capital and loan capital provided by a bank that is willing to take a chance on the success of a small firm
Incremental funding into the business by government
Crowd funding
Allowing another business to buy equity
Seeking financial support from an investment bank
Raising capital online from many small investors
Making a successful pitch to dragons den
Party Goers Ltdhas been successful. Raj and Abdul are keen to expand the business by opening another shop. To do this they will use long-term sources of finance.
Which two of the following are examples of long-term sources of finance?
Trade credit
Venture capital
Share capital
Sales revenue
Overdraft
Venture capital is a long-term source of finance for small businesses.
Which two of the following are the most likely advantages to a business of using venture capital?
Select two answers:
Venture capitalists do not interfere with the running of the business
Venture capitalists do not have to pay tax
There is the opportunity to benefit from expert advice
It increases access to finance for small businesses
There is no need to produce a business plan
Which one of the following is an example of a long-term source of finance?
Select one answer:
Sales revenue
Bank loan
Trade credit
Overdraft
Which two of the following are disadvantages of using personal savings as a source of finance?
Select two answers.
No interest will have to be paid
The amount available might not be sufficient
The money will not have to be repaid
Less money available to deal with emergencies
The money is instantly available
Which two of the following are disadvantages to Mike, Sarah and Laura of a venture capitalist investing in their business Wedge Welly?
Select twoanswers.
The venture capitalist risks losing their investment
Higher corporation tax will need to be paid
Potential conflict between the shareholders
The risk of WedgeWelly failing is reduced
It will reduce the control of the existing owners
Which oneof the following is an example of long-term finance for a sole trader?
Select one answer.
Share capital
Overdraft
Trade credit
Bank loan
