Edexcel A-Level Business Theme 2.3 Managing finance overview quiz quiz

Revenue minus all expenses, interest and tax

Revenue minus cost of sales

Operating profit minus tax

Revenue minus operating expenses

$25\%$

$80\%$

$40\%$

$120\%$

They are exactly the same thing measured in different units

Profitability is always a larger number than the profit figure itself

Profit applies only to public limited companies and nobody else

Profit is an absolute amount; profitability relates profit to sales

$0.5$

$2$

$60,000$

$180,000$

It subtracts inventory from current assets before dividing by current liabilities

It adds the full value of the inventory on to current assets before doing the division

It uses total assets in the numerator instead of just the current assets

It completely ignores current liabilities in the calculation entirely

They mean the same thing and the two terms are fully interchangeable

Insolvency only ever affects very large companies and never affects small firms in any way at all

Insolvency is having no cash to pay debts now; unprofitability is making losses over time

A lack of profitability always causes the immediate closure of the firm

A deep and prolonged national economic recession

New government regulation imposed on the whole industry

A sharp rise in costs across the entire industry

Poor cash-flow management and overtrading

$16\%$

$8\%$

$50\%$

$625\%$

Improving overall staff morale and job satisfaction

Achieving a target return on investment

Reducing the firm's overall carbon footprint and emissions

Winning a prestigious national design award

It definitely cannot pay any of its debts as they fall due

It is automatically insolvent and heading for closure

It may be holding idle cash or excess stock earning no return

It is certainly holding far too little inventory in its warehouse