Lesson 1.2.2
1.2.2 Financial Aims and Objectives Quiz: NCFE Business & Enterprise, Unit 1
20 questions
In partnership with Revision Ninja
Financial aims are targets measured in money. This lesson covers revenue, costs, profit and margin, the value of a business, tangible and intangible assets, and the difference between liquidity, cash flow and solvency, including why a profitable firm can still run short of cash.
Key points
- Revenue is price multiplied by quantity sold, so with fixed prices it rises only by selling more.
- Cutting costs means less money leaves the business, for example through cheaper beans, route planning or leasing equipment.
- Profit per unit is the selling price minus the total cost of making that unit.
- Tangible assets can be touched, such as vans and ovens; intangible assets, such as patents and brand, cannot.
- The value of a business is what a buyer would pay, and a strong brand and loyal customers raise it.
- Liquidity is the ability to pay short-term bills when they fall due, which is different from being profitable.
- A firm is solvent when its assets are worth more than its debts, and insolvent when they are not.
Key terms
- Revenue
- The money coming in from selling goods and services, measured before costs are taken off.
- Profit margin
- The gap between the selling price of a unit and what it costs to make.
- Cash flow
- The timing of money actually moving into and out of the business bank account.
- Liquidity
- How easily a firm can find cash to pay debts that are due soon.
- Solvent
- Having assets worth more than total debts, so the firm can keep trading.
- Tangible asset
- A physical item the business owns, such as vehicles, buildings or stock.
- Intangible asset
- A valuable asset with no physical form, such as a patent, brand or customer loyalty.
Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.
The 20 questions
-
Financial aims and objectives set targets for which factors?
- Office location choice
- Logo design styles
- Staff dress code
- Revenue and costs
-
How can a café raise revenue without changing its prices?
- Stop buying ingredients
- Reduce opening hours
- Increase spend per visit
- Sack all staff
-
Which action would directly help a bakery lower its costs?
- Lease the ovens
- Open on Sundays
- Raise product prices
- Launch a marketing campaign
-
A candle sells for £8.00. The materials, labour and overheads in each one come to £5.50. What is the profit per unit?
- £2.50
- £1.45
- £13.50
- £5.50
-
Which item listed by a firm is an intangible asset?
- Bank cash
- Patent
- Factory building
- Delivery van
-
In business finance, what does liquidity measure?
- Ability to pay debts
- Value of machinery
- Total annual profit
- Market share size
-
What does business cash flow actually measure?
- Total profit
- Retained earnings
- Money movement
- Net assets
-
A firm sets the target 'cut what we pay suppliers by 10% this year'. Which financial objective is that?
- Increase its value
- Improve its liquidity
- Decrease its costs
- Increase its revenue
-
Which of these is classified as a tangible asset for a bakery?
- Business copyright
- Delivery vans
- Customer loyalty
- Brand strength
-
What is the primary objective when a firm aims to increase its value?
- Maximise daily output
- Maximise business worth
- Minimise fixed costs
- Increase loan capital
-
What does revenue measure in a business?
- Total retained earnings
- Money from sales
- Shareholder dividend total
- Net annual profit
-
Which action is most likely to increase a sandwich shop's sales revenue?
- Sourcing cheaper bread
- Negotiating lower rent
- Opening longer hours
- Reducing staff wages
-
Which action would best help a delivery firm reduce its operating costs?
- Planning shorter routes
- Increasing advertising spend
- Raising driver wages
- Expanding delivery areas
-
Which action would widen the profit margin a café earns on its coffee?
- Renting a larger shop
- Hiring more staff
- Buying cheaper beans
- Lowering selling prices
-
What best explains why two firms with equal profit have different business values?
- Recent tax increases
- Higher daily expenses
- Strong brand reputation
- Lower monthly sales
-
Why is increasing business value an important aim for owners?
- Lowers wage costs
- Increases daily stock
- Raises sale payout
- Reduces tax bills
-
What does poor liquidity indicate about a business?
- Struggling to pay bills
- Lacking customer demand
- Holding excessive profits
- Making permanent losses
-
What does it mean for a business to be solvent?
- Sales exceed targets
- Cash exceeds profit
- Assets exceed debts
- Revenue exceeds costs
-
Why might a profitable business still run out of cash?
- High profit margins
- Late customer payments
- Low selling prices
- Excessive bank interest
-
Which of these is a financial objective rather than a non-financial one?
- Improving staff morale
- Boosting ethical status
- Reducing carbon emissions
- Cutting unit costs
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