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WorksheetsBusiness Finance Revision - All Topics
Total questions: 90
Worksheet time: 57mins
What is the contribution formula?
Revenue - Costs
Variable costs + Direct Costs
Selling Price - Variable cost per unit
Revenue / Expenses
Which statement best describes a profit and loss account?
Document showing revenues and costs over time
Budget forecasting future income and expenses
Statement listing assets, liabilities, and owner equity
Ledger recording daily cash receipts and payments
Sales revenue is calculated primarily by which method?
Total profit divided by units sold
Price multiplied by quantity sold
Cost of sales plus gross profit
Expenses subtracted from net profit
Which item is MOST likely included in cost of sales?
Marketing for a new campaign
Office rent for headquarters
Raw materials for production
Insurance for company vehicles
Gross profit is defined by which formula?
Sales revenue minus cost of sales
Sales revenue minus expenses
Cost of sales minus net profit
Net profit minus overheads
Expenses (overheads) are best described as which type of cost?
Indirect and not linked to output
Direct and vary with units
Variable tied to materials
Direct labour used in production
Net profit is calculated using which relationship?
Gross profit minus expenses
Cost of sales minus gross profit
Sales revenue minus cost of sales
Gross profit plus overheads
Which example BEST represents an overhead rather than a direct cost?
Packaging for finished goods
Wages of assembly line
Steel used to manufacture
Administration staff salaries
A business reports sales revenue of £250,000 and cost of sales of £150,000. What is the gross profit?
£400,000
£150,000
£100,000
£350,000
If gross profit is £100,000 and total expenses are £60,000, what is the net profit?
£40,000
£140,000
£160,000
£60,000
Which stakeholder primarily is interested in profit to decide on dividends?
Banks and lenders
Employees and unions
Government tax authorities
Owners and shareholders
Which use of net profit is MOST appropriate for long-term growth?
Reinvesting back into the business
Reporting cost of sales
Paying office utility bills
Calculating sales revenue
Why might higher sales revenue NOT guarantee higher profit?
Expenses never change with output
Gross profit always equals costs
Taxes always exceed sales
Costs must also be considered
Which action may directly increase revenue rather than cuts costs?
Outsourcing non-core activities
Reducing administration expenses
Negotiating lower supplier prices
Raising prices on existing products
Which strategy is best described as a cost reduction method?
Lowering fixed costs like rent
Improving marketing and promotion
Expanding into new markets
Introducing new or improved products
Gross Profit Margin (GPM) is calculated using which formula?
Gross Profit divided by Sales Revenue, times 100
Net Profit divided by Sales Revenue, times 100
Sales Revenue divided by Gross Profit, times 100
Cost of Sales divided by Sales Revenue, times 100
A higher GPM most strongly indicates which outcome?
Stronger financing leverage
Better production efficiency
Higher administration expenses
Lower overall profitability
Net Profit Margin (NPM) measures what aspect of performance?
Overall business profitability
Revenue growth over time
Marketing campaign efficiency
Supplier negotiation effectiveness
Which formula correctly computes Net Profit Margin (NPM)?
(Net Profit ÷ Sales Revenue) × 100
(Gross Profit ÷ Sales Revenue) × 100
(Net Profit ÷ Cost of Sales) × 100
(Sales Revenue ÷ Net Profit) × 100
A business wants to benchmark performance against competitors. Which metric set is most appropriate?
Marketing spend percentages only
Inventory turnover ratios alone
Total assets and liabilities
GPM and NPM over time
Given a Sales Revenue of £200,000 and a Gross Profit of £40,000, what is the GPM?
20 percent
25 percent
30 percent
35 percent
What is another name for a business' sales revenue?
Sales
Costs
Sales turnover, turnover or revenue
Profit and Loss
If a business's costs exceeds it sales revenue, it will experience a ........?
Loan
Profit
Loss
Debt
Which group is interested in a business's profit and loss account?
Local community
Customers
Stakeholders
Pressure Groups
Corporation Tax is paid by?
Partnerships
Companies
Sole traders
Individuals
What will impact the gross profit margin?
Cost of sales increase
Decrease in operating (other) expenses
Sales price charged remaining the same
Increase in operating (other) expenses
Reducing the salary of employess
Which two of the following could potentially cause an increase in net profit?
Increase in sales revenue
Decrease in sales revenue
Increase in other operating expenses and interest
Decrease in other expenses
Increase in cost of sales
Which two of the following are fixed costs
Rent
Raw materials
Electricity
Water
Advertising
Which strategies are most suitable for increasing the revenue in a business?
Increase price
Increase promotion
Decrease price
Improve distribution channels
Reducing staff salaries
What assumption does this statement say "Break even is 54 units"?
if we sell 55 we aren't making a profit
if we sell 54 we begin to make a profit
if we sell 55 we begin to make a profit
if we sell 54 we are not yet at break even point
My total costs are £50,000 when selling 100 items. My fixed costs are £20,000. What must be the variable cost of one item?
£300
£500
£200
Cannot be calculated
We are going to manufacture Whats-Its. The Whats-It machine costs £4000.It also costs £5 for materials and labour for each Whats-It. We are planning to sell our Whats-Its for £12 each. How many Whats-Its must we sell in order to breakeven?
571.42
572
570. 63
571
What is the break-even point in units for a company whose total fixed costs are £275,450; selling price per unit is £16; and variable cost per unit is £14.75?
220,360
150,300
183,633
225,120
Fixed costs: = £30,000
Variable cost: = £200 per photo shoot
Forecast output (Sales): = 140 photo shoots
Selling price: = £1000 per photo shoot
What is the Contribution?
£112 000
£112 500
£375
£800
Simon has worked out the following figures for new Bobble Hats he is going to sell. He estimates that he can produce 20 000 hats a month with a selling price of £3.50. He expects the machinery costs to be £60 000 per annum, staff salaries are £72 000 per annum and raw materials cost £30 000 per month.
What is the margin of safety?
66 000
74 000
200 000
174 000
Baljeevans Burgers has sales of 250 units, a sales revenue of £26 500, total variable costs of £12 340 and total fixed costs of £4 600 (all annual figures).
Calculate the Total Contribution
£56.64
£14 160
£14 410
£566.40
Baljeevans Burgers has sales of 250 units, a sales revenue of £26 500, total variable costs of £12 340 and total fixed costs of £4 600 (all annual figures).
Calculate the Contribution per unit
£56.64
£14 160
£14 410
£566.40
Baljeevans Burgers has sales of 250 units, a sales revenue of £26 500, total variable costs of £12 340 and total fixed costs of £4 600 (all annual figures).
Calculate the Profit or Loss
£9 560
£95 600
£662 5000
£660 8060
Calculate the total contribution from the first 100 customers
£65
£650
£6 500
£65 000
Calculate the Break Even Quantity
65
650
365
3 650
Calculate the expected profit from the first year of trading, based on the assumption that it will attract 450 customers.
£552
£55 250
£5 525
£37 225
£29 250
Fixed Costs £42 525
Variable Costs £3 per Item
Forecast Output (Sales) 11 262
Sales Revenue £135 144
What is the Break Even?
4725
12
5000
None of these
Which formula correctly computes ARR (%)?
(Total revenue ÷ Fixed costs) × 100
(Contribution per unit × Units) ÷ 100
(Average annual profit ÷ Initial investment cost) × 100
(Variable cost ÷ Price) × 100
What is the concept measured by Average Rate of Return (ARR)?
Average percentage return from an investment
Total revenue growth per unit sold
Average decrease in variable costs
Fixed cost recovery time in years
Which statement best explains a limitation of ARR?
It ignores the timing of cash flows
It uses cash flow instead of accounting profit
It measures risk with probability models
It discounts future cash flows accurately
Profit is defined as money left after all costs are paid. Which formula matches this definition?
Profit = Costs − Revenue
Profit = Revenue ÷ Costs
Profit = Total costs + Total revenue
Profit = Total revenue − Total costs
A personal trainer earns £1,000 and spends £300 on costs. What is the profit?
£600 profit for the week
£700 profit for the week
£800 profit for the week
£500 profit for the week
Which formula correctly calculates total cost?
Revenue − Total variable costs
Revenue + Profit totals
Fixed costs + Total variable costs
Fixed costs − Variable costs
Which item is most likely a variable cost for a phone case maker?
Accountant salary monthly
Raw plastic per case
Factory insurance annual
Machinery lease monthly
What is the break-even formula in units?
Fixed costs divided by contribution per unit
Fixed costs multiplied by selling price
Selling price minus fixed costs
Variable costs divided by selling price
A café considers lowering price to £9 while variable cost stays £2 and fixed £300. What happens to the break-even point?
It decrease because contribution rises
They become impossible to calculate
It increase because contribution falls
They stay the same regardless of price
If fixed costs double but contribution per unit stays constant, what happens to break-even units?
They double compared to before
They halve compared to before
They become negative
They stay unchanged
Why might a high ARR still be rejected in practice?
Fixed costs are always zero
Break-even customers too low
Contribution per unit too high
Project risk or cash flow timing
What is represented by the purple region in the break even diagram shown here?
The break even point
Profit
Loss
What is represented by the orange region in the break even diagram shown here?
The break even point
Profit
Loss
Tick the options that will decrease the quantity of units that need to be sold to break even (all other factors staying the same)
Reducing fixed costs
Reducing variable costs per unit
Reducing the price of the product
Increasing the price of the product
Increasing contribution
A cash flow statement shows an overview of money flowing in and out of a company
True
False
What is the money available to pay for day to day operational costs called?
Cash
Working capital
Profit
All of the above
Assume a firm sells goods costing £40,000 for £55,000. It provides the customer
with 70% trade credit (i.e. the customer pays only 30% of the price as a down
payment). The profit earned is __________, and the cash received is _________.
£15,000, £12,000
£15,000, £16,500
£15,000, £28,000
£15,000, £55,000
The term _________ describes how efficiently an asset can be converted into
cash.
Liquidity
Solvency
Conversion rate
Working capital cycle
In a given cash flow forecast, the closing balance in June would become the ____________ of July.
Closing balance
Working capital
Net cash flow
Opening balance
Which of the following reduces a businesses cash flow?
Asking debtors for payment
Repaying an overdraft
Securing better trade credit terms from suppliers
selling an asset would be an example of
cash inflow
cash outflow
What is the formula used for a cash flow forecast?
[ Receipts - Payments = Net Cash Flow ] + Opening Balance = Closing Balance.
[ Receipts - Payments = Net Cash Flow ] - Opening Balance = Closing Balance.
When scientists collect data that is measurable with numbers, we call it...
qualitative
quantitative
Two types of data scientists collect are...
random and sample
qualitative and quantitative
descriptive and inferential
parameter and statistic
Another word used to describe quaNTitative data is...
Categorical
Numerical
Read each statement and then determine which type of data it characterizes: qualitative, quantitative, or both.
Information is measured
Quantitative
Both
Qualitative
Read each statement and then determine which type of data it characterizes: qualitative, quantitative, or both.
More open-minded and fluid
Quantitative
Both
Qualitative
A business gathers information regarding the population size of a specific area. Which of the following best describes the information collected?
Marketing data
Market data
Financial data
Financial information
The pie chart below shows information about five businesses that operate in the same market. The total market is valued at £5,000,000.
Based on this information, the value of the market held by Business B is:
£300,000
£900,000
£1,400,000
£1,600,000
The table below shows the number of surfboards sold by a business over an 8 week period.
Based on this information, which of the following is the average weekly number of surfboards sold by the business?
0.31
3.25
3.71
4.5
