2.4.2 Understanding Business Performance

Question 1

What can businesses do with numerical data

Answer 1

Compare performance with competitors
Monitor Performance
Set goals or targets
Anticipate needs of customers
Make decisions about production levels

Question 2

Percentage change

Answer 2

Percentage change = (difference/original) * 100

Question 3

Limitations of financial data

Answer 3

It is historical (old data may not be helpful amking decisions about the future)
Qualitative factors could be more important eg. business reputations, employee motivation, why sales have fallen

Question 4

How does the financial position of a business affect its decisions

Answer 4

Using financial information, a business should be able to identify what options it can afford when making business decisions
This financial data can be used to forecast how decisions might affect the businesses cash flow and assess and impact on future profits

Question 5

Benefits of financial data

Answer 5

See trends and make comparison which can be helpful when making decisions
Can be useful when communicating with shareholders or potential lenders about the performance of a business