Business Objectives and Strategies Quiz
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Questions and Answers

What does the 'M' in SMART objectives stand for?

  • Monetary
  • Manageable
  • Measurable (correct)
  • Meaningful

    • Which of the following is a financial objective typically considered by a startup business in its first year?

  • Achieving high profits
  • Survival (correct)
  • Maximizing market share
  • Establishing a global brand

    • A new business aims to increase profit, which method would contribute toward this objective?

  • Increasing sales and reducing costs. (correct)
  • Decreasing revenue by offering discounts
  • Increasing costs and decreasing sales
  • Maintaining current sales and increasing costs.

    • Which is considered to be a non-financial objective when starting up a business?

    <p>Personal satisfaction (A)</p> Signup and view all the answers

    What is the primary focus of a business objective related to 'sales' in the first year?

    <p>Stimulating customer trials through low prices to increase purchases. (C)</p> Signup and view all the answers

    What is a common strategy used by businesses to increase market share?

    <p>Heavy promotion and offering discounts (A)</p> Signup and view all the answers

    Why might an entrepreneur need to ensure their new business is profitable?

    <p>To cover personal and business expenses (C)</p> Signup and view all the answers

    What is the primary goal of a social enterprise?

    <p>Trading for social or environmental purposes (C)</p> Signup and view all the answers

    Which of the following is a common personal motivation for starting a business?

    <p>To experience a challenge and have independence (A)</p> Signup and view all the answers

    What is a key characteristic of an entrepreneur seeking control?

    <p>They have more flexibility over their work life (A)</p> Signup and view all the answers

    Which of the following best describes the primary aim of a business in the private sector?

    <p>To maximize profits and expand the business. (D)</p> Signup and view all the answers

    Which of the following is an example of a variable cost for a furniture business?

    <p>The cost of any required wood. (A)</p> Signup and view all the answers

    What is the formula for calculating sales revenue?

    <p>Revenue = Price × Quantity Sold (D)</p> Signup and view all the answers

    Which of the following is typically considered a fixed cost for a business?

    <p>Monthly Rent for the business premises. (D)</p> Signup and view all the answers

    Which of the following is an example of a public sector entity?

    <p>A government funded state school. (A)</p> Signup and view all the answers

    What is the definition of total cost in a business?

    <p>The sum of all costs, including fixed and variable costs. (D)</p> Signup and view all the answers

    Which of these is a variable cost?

    <p>The cost of raw materials for each product (A)</p> Signup and view all the answers

    How is gross profit calculated?

    <p>By subtracting the cost of goods sold from revenue. (D)</p> Signup and view all the answers

    If a business has revenue of $35,000, a cost of sales of $20,000, and total expenses of $3,000, what is the net profit?

    <p>$12,000 (B)</p> Signup and view all the answers

    What is the main purpose of profit for a business?

    <p>To allow business owners to keep the money or reinvest it. (B)</p> Signup and view all the answers

    What is the formula for calculating the total cost?

    <p>Fixed Costs + Variable Costs (D)</p> Signup and view all the answers

    In break even analysis, what does the term 'fixed cost' refer to?

    <p>Costs that remain constant regardless of sales or production (D)</p> Signup and view all the answers

    If a business has a revenue of $100,000 and total costs of $75,000, what is its profit?

    <p>$25,000 (D)</p> Signup and view all the answers

    What does the break-even point represent for a business?

    <p>The point where a business's total revenue equals the total cost (A)</p> Signup and view all the answers

    A business has $5000 in fixed costs, the selling price of a product is $25 and the variable cost per product is $15. What is the break-even point in units?

    <p>500 (A)</p> Signup and view all the answers

    What does the 'margin of safety' represent in break-even analysis?

    <p>The amount of sales a business can lose before incurring a loss. (A)</p> Signup and view all the answers

    At what point does the break-even point occur?

    <p>When total revenue equals total cost. (A)</p> Signup and view all the answers

    According to the provided table, what is the total cost when 250 units are sold?

    <p>42000 (A)</p> Signup and view all the answers

    If a business sells 300 units, what is their total revenue, based on the table?

    <p>54000 (A)</p> Signup and view all the answers

    Based on the information, how the business achieves profitability?

    <p>By selling more than 200 units. (A)</p> Signup and view all the answers

    What is the primary consequence of a business failing to pay its suppliers on time?

    <p>Suppliers may refuse future business. (A)</p> Signup and view all the answers

    Which of the following is classified as an overhead cost for a business?

    <p>Business insurance premiums. (C)</p> Signup and view all the answers

    What is a potential consequence of a business not paying its employees?

    <p>Employees may take legal action. (D)</p> Signup and view all the answers

    Why is cash flow considered to be crucial for businesses?

    <p>To enable the business to pay its obligations. (B)</p> Signup and view all the answers

    Which formula correctly defines profit?

    <p>Profit = Total revenue - total cost (B)</p> Signup and view all the answers

    What is the primary purpose of a cash flow forecast?

    <p>To predict future cash inflows and outflows. (B)</p> Signup and view all the answers

    Which of these options is an example of a cash outflow for a business?

    <p>Payments to music bands. (D)</p> Signup and view all the answers

    Which of the following is NOT a method to improve a business's cash flow?

    <p>Increasing credit periods for all customers. (C)</p> Signup and view all the answers

    What does the 'opening balance' in a cash flow forecast represent?

    <p>The amount of cash the business starts with at the start of a specified period. (D)</p> Signup and view all the answers

    Which of the following describes an overdraft facility?

    <p>A method of borrowing using a bank credit card. (A)</p> Signup and view all the answers

    Which of the following is an advantage of using personal savings as a source of finance for a new business?

    <p>It is a relatively cheap source of finance, as there is no interest to pay. (B)</p> Signup and view all the answers

    Which of these is a potential disadvantage of using trade credit as a source of finance?

    <p>The supplier may charge a higher price for the goods. (C)</p> Signup and view all the answers

    What is a potential disadvantage of using venture capital as a source of finance for a business?

    <p>Venture capitalists may require a significant share of the profits, potentially reducing the owner's control over the business. (A)</p> Signup and view all the answers

    Which of the following statements accurately describes a potential advantage of using trade credit?

    <p>Trade credit can provide a business with additional time to pay for goods or services, potentially improving cash flow management. (B)</p> Signup and view all the answers

    What is one potential drawback of relying solely on personal savings to finance a new business?

    <p>It can limit the business's ability to attract other investors or secure loans in the future. (D)</p> Signup and view all the answers

    What is a primary advantage of using an overdraft as a source of finance?

    <p>No security typically required (C)</p> Signup and view all the answers

    What is one of the main disadvantages of using an overdraft?

    <p>High interest rates compared to other loans (D)</p> Signup and view all the answers

    Which of the following best describes overdrafts?

    <p>A flexible short-term loan facility (A)</p> Signup and view all the answers

    What might lead to a bank refusing an overdraft facility?

    <p>Inability to meet repayment obligations (C)</p> Signup and view all the answers

    How does the cost of an overdraft compare to other sources of funding?

    <p>It is generally more expensive due to high rates and fees (C)</p> Signup and view all the answers

    What is an opportunity cost in the context of financing?

    <p>Using funds that could be spent elsewhere (B)</p> Signup and view all the answers

    Which of the following is NOT typically a characteristic of short-term financing options like overdrafts?

    <p>Long repayment terms (D)</p> Signup and view all the answers

    Which factor can affect a business's need for overdraft financing?

    <p>The fluctuations in business performance (A)</p> Signup and view all the answers

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