9. finance

• What indicates sustainability in a business?

  Profit
• What are sales revenues?

  Sales of products or services
• How is gross profit calculated?

  Revenue minus direct costs of production
• What does net profit represent?

  Net income after all costs are deducted
• Why is gross profit essential for a business?

  It helps cover operating expenses and pricing decisions
• What does net profit reflect about a business?

  Overall financial expenses and revenue generation
• What is a loss in business terms?

  More expenses than sales revenue
• What are potential causes of a business loss?

  Increased expenses and lower market prices
• What are the consequences of a business loss?

  Depleted financial reserves and missed payments
• What is cash flow?

  Movement of money into and out of a business
• What does positive cash flow indicate?

  More money coming in than spending
• What does negative cash flow indicate?

  Spending more money than making
• How is gross profit margin calculated?

  Gross profit divided by sales revenue times 100
• What are cash flow management techniques?

  • Forecasting: budget and plan resources
  • Monitoring: track monthly income
  • Timing: manage debt and payment terms
• What are the components of cost of goods sold for the egg farm?

  Opening stock, direct purchases, total stock
• What are the types of costs incurred by a business?

  Product purchases, ancillary products, overheads, labour
• What are fixed costs?

  Costs that do not change over time
• What are variable costs?

  Costs tied to the level of production
• What are direct costs?

  Costs directly linked to production
• What are indirect costs?

  Expenses not directly linked to products
• How are costs classified for reporting requirements?

  • Income and expenses statement: direct and indirect costs
  • Balance sheet: fixed and variable costs
• What is the purpose of maximizing sales revenue?

  To generate higher income and attract customers
• What are specific measures to maximize sales revenue?

  Market analysis, target audience, long-term goals
• What role does marketing play in generating sales?

  Promotes products and attracts new customers
• What are some methods of diversifying revenue streams?

  Direct marketing, agritourism, value-added products
• What is efficient management in business processes?

  Reducing loss through quality control and planning
• What is the importance of risk management?

  Mitigates impacts of unforeseen events
• What are cost management methods?

  • Budgeting and planning
  • Cost tracking and analysis
  • Economies of scale
  • Bulk buying
  • Efficient labour
• What are the implications of maximizing revenue?

  Profitability, reputation, and quality considerations
• What is a forecast in business?

  An estimate of future achievements
• What are the types of business revenue?

  Sales, rental, commodity price gains, grants
• What is opportunity cost?

  Value of the next best alternative
• What are sunk costs?

  Expenses already paid and unrecoverable
• What are controllable costs?

  Costs that can be managed internally
• What are challenges in forecasting fixed costs?

  They are harder to predict long-term
• What are payroll taxes?

  Taxes deducted from employee income
• What is business tax based on?

  Taxed on profits made by the business
• What is VAT?

  Value Added Tax on products and services
• What must VAT registered businesses do?

  Record VAT charged and submit returns
• What are internal sources of finance?

  Finance generated within the business