Business 2.3

Question 1

What are the three types of profit

Answer 1

gross profit
operating profit
net profit

Question 2

what are some wasy to increase profitability

Answer 2

reduce one off costs and interentest
reduce costs of production
reduce expenses
increase prices

Question 3

what does the balance sheet contain

Answer 3

conclusions about the liquidity of the business

Question 4

What are the two ways to measure liabilitiy

Answer 4

current ratio =current assetts/ ucrrent liabilites
acid test = current assets -inventory/current liabilities

Question 5

What are some ways to improve liquidity

Answer 5

reduce credit period
ask suppliers for increased repayment period
overdraft
sell off excess stock
sale of assets
introduce new capital

Question 6

what is working capital?

Answer 6

the money a business has to fund its day to day activities

Question 7

What are some internal reasons of business failure?

Answer 7

poor planning
lack of leadership
inneffective marketing
cash flow problems
lack of funds

Question 8

What are some external causes of business failure

Answer 8

economic changes
change in consumer preferences
legal factors
technological change
market challenges