1.3

• What do business aims represent?

  Long-term aspirations of an organization
• What are business objectives?

  Specific, measurable, achievable, relevant, time-bound targets
• Why are aims and objectives important for businesses?

  They align employee efforts towards a common vision
• What might a corresponding objective be for the aim of becoming a market leader?

  Increasing sales by 25% over three years
• What are common financial objectives for start-ups?

  • Survival in the first year
  • Sales to earn income
  • Profit exceeding costs
  • Market share growth
  • Financial security
• What are common non-financial objectives for start-ups?

  • Social entrepreneurship
  • Personal satisfaction
  • Challenge of innovation
  • Independence and control
• Why do business aims and objectives vary between businesses?

  They are influenced by industry, size, culture, ownership, and location

  
• How does industry influence business objectives?

  Different industries have different primary objectives
• How does the size of a business affect its aims?

  A small business may focus on survival and growth
• What role does culture play in business objectives?

  Culture reflects values and impacts aims and strategies
• How does geographic location affect business aims?

  Location influences priorities like innovation or job creation
• What is sales revenue?

  The value of the units sold by a business
• How is sales revenue calculated?

  Sales revenue = Selling price x number of units sold
• What is the selling price per bike if total revenue is £2,200,000 and total sales are 3000 bikes?

  $£733.33$
• What are fixed costs?

  Costs that do not change with output levels
• How is total cost calculated?

  Total cost = total fixed costs + total variable costs
• What is the significance of total costs in business?

  Total costs cannot be zero due to fixed costs
• What is the formula for calculating percentage change?

  Percentage change = (new value - old value) / old value x 100
• What are the two types of profit?

  Gross profit and net profit
• How is gross profit calculated?

  Gross Profit = Revenue - cost of sales
• How is net profit calculated?

  Net Profit = gross profit - (operating expenses + interest)
• What are the steps to calculate gross profit and net profit for a business?

  1. Calculate gross profit: Revenue - cost of sales
  2. Calculate net profit: Gross profit - (operating expenses + interest)
• If a scooter sells for £180 and variable costs are ⅖ of the selling price, what is the variable cost?

  $£72$
• What is the annual fixed cost if an e-scooter manufacturer pays £2,600 in interest and sells 26,400 scooters?

  £820,000
• What are the implications of reducing costs for a business?

  • May improve profit margins
  • Can affect customer service quality
  • Risk of lower product quality
  • Potential impact on employee satisfaction
• What is profit?

  Money left after all costs are accounted
• What happens if costs exceed sales revenue?

  The firm incurs a loss
• What are the two types of profit?

  • Gross Profit (GP)
  • Net Profit (NP)
• What does Gross Profit represent?

  Difference between sales revenue and production costs
• What does Net Profit represent?

  Difference between gross profit and operating expenses
• What is the selling price of the e-scooter?

  £180 per unit
• What are the variable costs as a fraction of the selling price?

  ⅖ of the selling price
• What is the variable cost per unit for the e-scooter?

  £72
• What is the gross profit for the year for the e-scooter manufacturer?

  £2,851,200
• What is the net profit for the year for the e-scooter manufacturer?

  £2,028,600
• What is a profit margin?

  • Amount by which sales revenue exceeds costs
  • Can be calculated for gross and net profit
  • Higher margins indicate better performance
• What does the Gross Profit Margin show?

  Proportion of revenue turned into gross profit
• How is Gross Profit Margin calculated?

  Gross Profit / Sales revenue × 100
• What is the Gross Profit Margin for Head to Toe Wellbeing in 2022?

  84.82%
• What does the Net Profit Margin show?

  Proportion of sales revenue turned into net profit