Managing Finance | Edexcel A-Level Business (9BS0)
Managing Finance
- 85 questions
- 3 subtopics
- Theme 2: managing business activities
- Paper 2 and Paper 3
Managing finance is the third section of Theme 2.
It covers the difference between making a profit and having cash in the bank, the ratios that measure each, and what happens to a business that gets the second one wrong even while the first looks healthy.
Sample questions from Managing Finance
Answer each one closed book first, then open the answer.
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Profit
What does the gross profit margin measure?
Show the answer
The percentage of revenue that remains after deducting cost of sales -
Profit
How does reducing operating expenses improve profitability?
Show the answer
It increases operating profit by lowering the costs deducted from gross profit -
Liquidity
Calculate the acid test ratio when current assets = £399,000, inventory = £73,000, current liabilities = £151,000.
Show the answer
Acid test ratio = (399000 − 73000) ÷ 151000 = 2.16:1. -
Liquidity
Calculate the working capital when current assets = £403,000, current liabilities = £104,000.
Show the answer
Working capital = 403000 − 104000 = £299,000. -
Business failure
How can currency fluctuations lead to business failure?
Show the answer
Currency fluctuations can increase the cost of imported materials or reduce the competitiveness of exports, squeezing profit margins and potentially making the business unviable. -
Business failure
Explain how technological disruption can cause a business to fail.
Show the answer
Technological disruption can make a business's products, services, or processes obsolete, allowing more innovative competitors to capture market share and leaving the business unable to compete.
The 3 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Profit | Gross, operating and net profit and the margin for each, the statement of comprehensive income, the ways a business can improve profitability, and why profit and cash differ under the accruals concept. | 36 |
| Liquidity | The current and acid test ratios, working capital, and the actions that free up cash when a business is short of it. | 26 |
| Business failure | The financial causes such as poor cash flow, weak controls and excessive debt, and the non-financial causes such as inadequate marketing and no strategic plan. | 23 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
Edexcel A-Level Business Active Recall Guide
Every topic, not just this one. 2,305 questions with their answers.