Making Financial Decisions GCSE Business Quiz
Test your knowledge of Making Financial Decisions with this quiz.
This quiz consists of 15 questions, including multiple-choice and short-answer questions.
For multiple-choice questions, choose the correct answer.
Questions
What is the formula for calculating gross profit?
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If a business has a revenue of £500,000 and its cost of goods sold is £300,000, what is its gross profit?
Gross Profit = Revenue - Cost of Goods Sold
Gross Profit = £500,000 - £300,000 = £200,000
What does net profit represent for a business?
The money left after deducting all costs, including taxes and operating expenses.
If a business has a net profit of £150,000 and a revenue of £500,000, what is its net profit margin?
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What is the formula for calculating the gross profit margin?
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A business has a gross profit of £250,000 and a revenue of £1,000,000. What is the gross profit margin?
Gross Profit Margin = (Gross Profit ÷ Revenue) × 100
Gross Profit Margin = (£250,000 ÷ £1,000,000) × 100 = 25%
What does the average rate of return (ARR) measure?
The average rate of return (ARR) measures the profitability of an investment over its lifespan, expressed as a percentage of the initial investment.
If a business invests £100,000 in a project and expects to earn £20,000 annually for five years, what is the average rate of return (ARR)?
ARR = (Average Annual Profit ÷ Initial Investment) × 100
ARR = (£20,000 × 5 ÷ £100,000) × 100 = 20%
How is the average rate of return useful for business decisions?
The average rate of return is useful because it helps businesses assess the profitability of an investment and compare it to other potential investment opportunities to determine the most profitable option.
What is the main difference between gross profit and net profit?
Gross profit is the difference between revenue and the cost of goods sold, whereas net profit takes into account all costs, including operating expenses, taxes, and interest.
A business has a revenue of £600,000 and operating expenses of £400,000. If the cost of goods sold is £200,000, what is the gross profit?
Gross Profit = Revenue - Cost of Goods Sold
Gross Profit = £600,000 - £200,000 = £400,000
Why is it important for a business to calculate and interpret its financial data?
Calculating and interpreting financial data helps businesses make informed decisions about pricing, investment, and budgeting, ensuring long-term profitability and growth.
If a business has a net profit margin of 10% and revenue of £750,000, what is the net profit?
Net Profit = (Net Profit Margin ÷ 100) × Revenue
Net Profit = (10 ÷ 100) × £750,000 = £75,000
How can quantitative business data help a business improve its performance?
Quantitative data can help a business identify trends, monitor cash flow, assess profitability, and make informed decisions about cost control, investments, and pricing strategies to improve performance.
If a business has a net profit margin of 15%, gross profit margin of 40%, and a revenue of £1,200,000, what is its net profit?
Net Profit = (Net Profit Margin ÷ 100) × Revenue
Net Profit = (15 ÷ 100) × £1,200,000 = £180,000
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