Unit 3 Exam Questions

Question 1

What is direct cost?

Answer 1

Cost incurred by a business that specifically attrubuted to cost of product

Question 2

What is profit margin formula?

Answer 2

PBIT/SR X 100

Question 3

Pros and cons of loan capital

Answer 3

Easily avi=aiable No loss of concotorl and repayments and risk of collateral

Question 4

Pros and ocns of share capital

Answer 4

RP decrease no repayments Not all sahhres purchased Time consuming

Question 5

What is capital expenditur?

Answer 5

Firms expdneidture invested in non current assets such as Buildidng and machinery.

Question 6

How to calcualte VC?

Answer 6

1) Calcucute TVC=TC-FC 2)TVC/QUANITITY

Question 7

Pros and ocns of cf

Answer 7

Build consumer base chaepr time consumign and high comeption

Question 8

What is crowdfunding?

Answer 8

external source of finance raise funds form large number of people by collecting small amount of money

Question 9

Examples of Current assets

Answer 9

cash debotrs

Question 10

Examples of current libalites

Answer 10

trade creditors

Question 11

What is the best ration for curren ratio

Answer 11

1.2-2 it means th ebusiness is usign all it’s liquid assets effency if higher than this it would idicate the company ahs used its reosurces effienctly.

Question 12

What is strucutre of balane sheet?

Answer 12

NCA
accumalted deprcitiation gnca-ad
CA
TA
CL
NCL
TL
NET ASSETS-TA-TL
Equity same as net assets
Retained earnign-same as net assets
Total equity same as net assets

Question 13

What is share capital

Answer 13

External source of fiannce which invlvoes issuing of shahres to the stock market or to private invesotrs.

Question 14

How to calculate capital employed?

Answer 14

TA-CL

Question 15

How to improve ROCE?

Answer 15

Increase sales revnue and reduce costs

Question 16

Examples of Sources of revenue expediture for EST

Answer 16

Utility bills and salaries it is expsnses incurred by a business in its day to day operations

Question 17

How to improve liquidity ratios?

Answer 17

Sell of unwated assets pay of current liabaities increase salels revnuee by increasing stock and negotiate better prices and credit with suppliders

Question 18

What is income statewmnt format

Answer 18

SR
cogs
GP
Epsneses
Profit before intrest and tax -gp-expenses
-intrest
pprofit beofre tax
-tax
profit for period
dividens
RP=Porfit for period - dividiens

Question 19

What is a microfinance provider?

Answer 19

Financial services to small income business/owners typically towards low income female in form of small loans

Question 20

Explain one value of descriptive statistics

Answer 20

presenting data in bar charts help business analyses and identify most popular prodiuct.Also all to interpret data easier for managers and executives.

Question 21

What are some straggties which could be used to improve cashflow postion?

Answer 21

Negottiie with suppliers on credit temrs and neotite with consusmers on credit terms

Question 22

How can a business improve it’s cashflow postion

Answer 22

Increase salles and decrease costs

Question 23

Define the term retained profit?

Answer 23

Internal source of fianance leads to fiananicl surplus after all cosots have been deducuted and reinveseted back into the business

Question 24

What is investment?

Answer 24

Purchase of non current asset with the itnetion to gain futurree beneifits.

Question 25

Descrube the diffrence between gross profit margin and net profit margin?

Answer 25

GPM:Percentage of reveneu that exceeds the cogs wehreas net profit magrin is the percentage if revenue remaianign after e.i.t have been decudted.

Question 26

Evalaute the use of break even analysis in business dm,?

Answer 26

Break-even analysis helps businesses determine the minimum sales volume needed to avoid losses, guiding pricing strategies and cost control. It assists in assessing the financial viability of new projects and setting sales targets. However, it assumes that costs and revenues are linear and ignores external factors such as market conditions and economic fluctuations

Question 27

How to calcuute payback period?

Answer 27

1)Make table starting from year 0-4 and create CCF add numbers.
2)Use formula
3) Additional cashinflow needed is the alst negative number in cumalative net cash flow
4)Look at the Annual cashflwo in the enxt year
5)Number of years would be the last negative number in net cashflow
6)Forumla :Addiotnal cash inflow needed /Annual cashflow in the next year x 12 ( add THE NUMBER OF YEARS)

Question 28

Name intangible assets avibaale ot business?

Answer 28

Paptent exlcucisve right of invesiton for the owner to use it for commerical use