Making a business more successful

Question 1

How can a business increase net profit?

Answer 1

• increase sale price of product
• reducing how much it costs to make product
• reducing its spending

Question 2

Why are the strategies of increasing net profit risky?

Answer 2

• increasing price of product may cause sales to decrease
• if sales drop too much, business might not be able to afford all its expenses
• if material is too cheap, sales may drop as customers thing it is poor quality.

Question 3

How can you improve balance sheets?

Answer 3

• show if a business is not using resources effectively
• sheet may show extra stock/ unused assets – turn the resources into cash (sell extra stock, selling/renting unused assets)