Financial Concepts Quiz

What is the formula to calculate 'GPM'?

• Gross Profit / Net Sales

• Net Profit / Total Assets

• Operating Profit / Net Sales

• Net Sales / Gross Profit

What is the formula to calculate 'current ratio'?

• Current Assets / Current Liabilities

• Total Assets / Total Liabilities

• Current Liabilities / Current Assets

• Net Income / Total Liabilities

Define the term 'overdrafts'.

• A loan taken from a bank

• A deficit in a bank account caused by drawing more money than the account holds

• A type of savings account

• A fixed deposit account

What is the formula to calculate break-even?

• Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

• Total Revenue / Total Costs

• Variable Costs / Fixed Costs

• Selling Price per Unit / Fixed Costs

Describe the uses of the margin of safety calculation by a bakery.

• To determine the maximum production capacity

• To assess the risk of financial loss

• To calculate the difference between actual sales and break-even sales

• To evaluate employee performance

Describe difficulties in budgeting.

• Predicting future expenses accurately

• Increasing sales revenue

• Hiring new employees

• Expanding product lines

Explain non-financial factors leading to business failure.

• Poor management decisions

• High interest rates

• Low profit margins

• High production costs

Explain ways to improve profitability.

• Reducing costs and increasing sales

• Increasing employee salaries

• Expanding office space

• Hiring more staff

Give two limitations of cash flow forecasts.

• They are always accurate and reliable

• They can be affected by unforeseen expenses and inaccurate sales predictions

• They guarantee future profits

• They eliminate all financial risks

Which of the following is a method of production?

• Job

• Output

• Efficiency

• Competitiveness