AQA A-Level Business 3.5 Decision-making to improve financial performance overview quiz quiz

They are simply the same identical figure that has merely been measured in two different ways

Cash flow is always exactly equal to profit at the year end once all the accounts are finalised

Profit is revenue minus costs over a period; cash flow is the actual money moving in and out

Profit is only ever relevant to sole traders and has no meaning at all for limited companies

3,333 units

2,000 units

8,000 units

5,000 units

2,000 units

5,000 units

12,000 units

7,000 units

$0.5$

$2$

$60,000$

$180,000$

$5\%$

$50\%$

$20\%$

$80\%$

2 years

5 years

0.25 years

4 years

Debt must be repaid with interest and raises gearing; equity is selling shares and is not repaid

Debt finance dilutes the ownership of the firm, whereas equity finance must be repaid with interest

Equity finance is only ever available to sole traders and can never be raised by limited companies

Debt finance never has to be repaid and carries no interest charge for the business at any point

One that has absolutely no long-term borrowing at all and is funded entirely by its owners

One that relies heavily on debt finance relative to its capital employed

One that funds all of its expansion only from retained profit kept back from previous years

One that reliably makes very high profits every single year regardless of market conditions

It is far quicker and simpler to calculate by hand than the payback method ever is

It deliberately ignores the initial cost of the project when reaching its final decision

It accounts for the time value of money and all cash flows over the project's life

It never requires the firm to choose or apply any discount rate to the future cash flows

It can only ever be calculated by specialist computer software and never by hand by a person

It always gives a perfect and completely reliable prediction of exactly what will happen next

It entirely replaces the need for any managerial judgement when making important decisions

It is based on past data and ignores qualitative factors such as staff and brand

Selling price per unit minus variable cost per unit

Total sales revenue for the period minus the total costs of the whole business

The total fixed costs of the business divided by the total number of units of output

The profit left over per unit once corporation tax has been fully paid on it