Exam Practice PDF

## Exam Practice **w** Exam Practice **ROPE** 1. TC= FC+ UC 2. Revenue = quantity x price per unit 3. BEP = SP-UC 4. Interest = (TR-BA)/BA x100 5. Net cash flow = inflow – outflow 6. opening balance = closing balance of the last month. 7. losing balance = opening balance + net cash flow **challeng...

## Exam Practice **w** Exam Practice **ROPE** 1. TC= FC+ UC 2. Revenue = quantity x price per unit 3. BEP = SP-UC 4. Interest = (TR-BA)/BA x100 5. Net cash flow = inflow – outflow 6. opening balance = closing balance of the last month. 7. losing balance = opening balance + net cash flow **challenge** - spend loss on law materials + Bell for more = increase SP (6/7) - Interest = (total repayment - borrowed amount)/borrowed amount x100 - Explain one disadvantage to a business of operating in a competitive environment - There are a lot of competitors (1). Therefore a business may have to change to a lower price (1). This may mean that the business does not generate as high a profit (1). - Explain one advantage of using market mapping - Market mapping will allow a small business to spot a gap in the market. This can lead to a business developing a product to help fill this gap (1). As a result the small business may capture market share from competitors (1). - Explain one advantage of possessing non-financial independence - A non-financial aim could be independence (1). An entrepreneur is able to make their own decisions when running a business instead of being told what to do as an employee. - Explain one way a business can reduce its variable cost - One way to reduce variable costs is to find a cheaper supplier (1). This means a business will pay less for its raw materials (1). This will lead to a lower cost of production for each unit (1). - Explain one drawback to a business of having low levels of cash - A business with low levels of cash may not be able to pay suppliers (1). This would damage relationships with suppliers (1). Which means the business may not have sufficient levels of raw materials. - Revenue/Inflows | Month | Cash Sales | Payments received from debtors | Total Revenue | |---|---|---|---| | Feb | 2000 | 0 | 2000 | | Mar | 2500 | 350 | 2850 | | Apr | 2900 | 500 | 3400 | | May | 3450 | 700 | 4150 | | Jun | 4000 | 1000 | 5000 | | Jul | 4500 | 1250 | 5750 | - Expenses/Outflows | Month | Stock | Wages | Rent | Heat and lighting | Council Tax | Furnishings and fittings | Total Expenses | |---|---|---|---|---|---|---|---| | Feb | 800 | 900 | 1000 | 300 | 50 | 150 | 3200 | | Mar | 1000 | 900 | 1000 | 300 | 50 | 150 | 3400 | | Apr | 1200 | 900 | 1000 | 300 | 50 | 150 | 3600 | | May | 1400 | 900 | 1000 | 300 | 50 | 0 | 3650 | | Jun | 1600 | 1100 | 1000 | 300 | 50 | 0 | 4050 | | Jul | 1800 | 1100 | 1000 | 300 | 50 | 0 | 4250 | - Net cash flow - (total revenue - total expenses) - Opening Balance - Closing Balance | Month | Net cash flow | Opening Balance | Closing Balance | |---|---|---|---| | Feb | (1200) | 0 | (1200) | | Mar | | (1200) | (1950) | | Apr | 500 | (1950) | (500) | | May | 950 | (500) | | | Jun | 1500 | | | | Jul | | | | ## Sources of Business Finance **ROPE** 1. What is the importance of cash? - To pay debts 2. Debts 3. Businesses operating in the market 4. Market share: Proportion of the business sales in relation to the entire market 5. Net cash flow = inflow - outflow 6. How much sales are needed to reach the BEP 7. To be your own boss (5/7) **Key words** - Finance - refers to sources of money for a business - Trade credit - when a business delays payments to a later date - Startup capital - the amount of assets needed to set up a business - Overdraft - These let a firm take more money out of its bank account than it has paid into it - Dividends paid - a sum of money paid regular by a company to its shareholders out of its profits. - Short-term sources of finance are usually suited for start-up businesses and small businesses. These sources will lend money for a limited period of time (e.g. for a month). - **Trade Credit** - **Advantages** - Useful for small businesses as they have time to regain the money needed to pay the debt - Improves cash flow - Improves relationship with your supplier - Less financial stress - More cash flowing in than going out - Less risk of making a loss - Late payment after the supplier. - **Disadvantages** - Higher cost if payments are not made on time due to added interest - Bad credit score - Delayed payments can be a strain on sellers - **Overdraft** - **Advantages** - They will allow businesses to make payments on time even if they don't have enough cash - do not risk damaging relationships with suppliers. - Provides the business quick access to a source of finance. - **Disadvantages** - Overdrafts usually have a high-interest rate than other loans and the bank can cancel an overdraft at any time - It is a short-term solution - If it isn't paid off then the bank can take some of the business assets ## Exam Practice - Application **SPÉ** 1. To devily competition 2. A gap in the market doesnt guarantee demand 3. A proportion of the business sales in relation to the entire market. 4. To pay off debts 5. Mos = actual output-Break-even output 6. To be your own boss. **P - Produce** **I - Industry** **C - Competition** **C - Consumer** **S- Scenario** ## Analyse the impact on Sports Tours Ltd of using market mapping to target customers (6) - Sports Tours Ltd was established in 1989 and is one of the leading online specialist sports-tour operators in the United Kingdom. It arranges tours for teams to destinations in the United Kingdom and Europe in sports such as football, rugby, hockey, and netball. The business not only organizes travel, accommodation, and meals but also arranges games and entry to tournaments for the sports team whilst on tour - Sports Tours Ltd has very high standards. It carries out full risk assessments for all tours, including possible pre-tour inspection visits. Tours are licensed and authorized through official agencies. All tours have regular contact with a member of staff from Sports Tours Ltd. - In recent years the business has faced increasing competition. This is not only from other sports-tour operators but also from teams organizing their own tours. Changing levels of consumer income and exchange rates have also had an impact on demand for tours by sports teams. - Sports Tours Ltd are confident that the high level of service they offer will help them to remain competitive. However, it is always looking for more ways to add value to its business activities. - **P- Sports Tours Ltd** - **I - Travel - Dayglugnt x Luxury** - **C - Athletes** - **S - Booking, com, tripadvisor, trailfinders, evedia** - **C - increased competition, increase value** - **S - demand decreasing** - **Disadvantage - retained profit** - Once used, there is none left over anymore. - **Definition - share capital** - Individuals can buy a part of your business. - **Advantages - share capital** - There's an opportunity to raise large amounts of money this way. - **Disadvantages - share capital** - As a business owner you won’t have full control over your business. - **Definition - venture capital** ## 9 Markers **ROPE** 1. Change in technology, change in trends 2. Original idea 3. Revenue = quantity x price per unit 4. BEP informs us the number of sales in unit or currency a business must produce to cover costs 5. Mos informs us the actual output and BEP = total revenue - total cost 6. Mos = total revenue- total cost x actual output - BEP 7. Surveys, internet, government reports (6/9) - **9 Market** - **1st Para - fully explain, anadvantage of your chosen option using the 3 market fitting frame - Make sure to link throughout (PICS)** - An advantage of OPT1 is... - This means that this is because ... - As a result ... - **2nd Para - fully explain, a disadvantage of your chosen option using the 3 market fitting frame - make sure to link throughout (PICS)** - However, a disadvantage is... - This means/this is because... - As a result.... - **3rd Para - conclusion - explaining why the other options were unsuitable and your overall opinion - make sure to LINK throughout (PICS)** - In conclusion, I believe that OPT 1 would have been suitable because ... - I think that OPT Y is much more suitable, however the success of this option depends on the business... - In order to maximize success, I would recommend that the business... - **Mind Candy** - Moshi Monsters - Gamming Market - Fortnite, LEGGI Fija 113 - Customers - young teenagers - Increased competition is a problem - Need to raise 1.2mil - **Retained profit -** is profit that is kept within the business rather than being paid out to shareholders, and it is reinvested. - **Share capital -** is money raised through the selling of shares (percentage of a company). ## Exam Practice - Application **ROPE** Adding value occurs when a business improves a good or service, thus encouraging customers to pay a premium price. 1. Adding value occurs when a business improves a good or service, thus encouraging customers to pay a premium price. 2. Increase market share, maximize profit, survival, enterprise. 3. There are multiple companies, who are competitors in that market. x 4. To find understand customers and their needs. 5. Net cash flow = inflow - outflow. - **Analyze the impact on Sports Tours Ltd of using market mapping to target customers 16 marks** - One advantage is that Sports Tours Ltd is looking to add value to the business. This means that they will differentiate themselves from their competitors such as booking.com and Expedia. As a result, customers will buy from them and not other companies. - One disadvantage is that the business is facing increasing competition in that market. This means that demand for Sports Tours Ltd is decreasing. As a result, they will have less revenue and lose money. x (1/2 marks) - **Market mapping allows Sports Tours Ltd to spot gaps in the market where tours can be offered to groups of customers that are interested in different sports such as netball and hockey. Market mapping may identify a gap that exists because there is not enough demand in the sport or types of tours.** ## 9 Marker Practice **C/W** 14/1/2025 1. 2. **What is the importance of cash?** - To pay debts - To prevent insolvency - To improve cash flow ## Glass Practice - 9 Marker - One advantage of that option is that a bank loan provides Aphrodite 250k pounds, all at once. This means that the Mackenzie brothers will have access to the finance quickly, and therefore, they can purchase the premises closest to them and expand the clothing store. As a result, Aphrodite would have purchased a premise before their competitor, Selfridges, meaning they can start selling Hugo Boss shirts to meet their customers’ demands. - However, one can argue that interest rates are 0.25%. This will increase Aphrodite’s monthly fixed cost. This could be negative for Duncan and, as such, buying out the premise would be a bad move as they will have to increase their sales of Hugo Boss shirts and so, aphrodizes will have to cover the additional interest. - In conclusion, crowd funding would not have been suitable as the funding target in not guaranteed to be met and would take a long time. I think bank loans are more suitable, however the success depends on if the interest rate remains the same and does not fluctuate. ## 9 Marker **C/W** 21/01/2025 **ROPÉ** 1. **Give 5 ways of segmenting the market:** - Age, gender, location, income - Actual output - break-even output 2. **Give 3 reasons why cash is important to a business:** - Pay off debt - Prevent insolvency - Improve cash flow 3. **Define market share:** - The proportion of sales that belongs to a business in relation to the market 4. **How does a private limited company become public?** - Undergoing stock market flotation – selling shares to the public 5. **Give 2 benefits of market research:** - Allow you to understand customer needs - Spot gaps in the market 6. **What’s the difference between qualitative and quantitative data?** - Qualitative data is based on opinions. It is descriptive data. - Quantitative data is numerical and figure based. 7. **Five output** - Level of production