1. Describe 2 ways in which a business may distribute goods to consumers?

Comments

1. ustoev says:

   January 9, 2010 at 7:16 am

   1. Describe 2 ways in which a business may distribute goods to consumers? They can ship them through many ways or the customer can come and get them. (An assessible store.)
   2. Explain the usefulness of a balance sheet to a public limited company. (6 marks) That balance sheet shows the equity in the company and where it is. How much is liquid (easily turned into cash) (Cash, accounts receivable, finished goods inventory minus accounts payable.)
   3. State the formula for gross profit. (2 marks) Sales minus the cost of goods sold (direct costs of the products sold).
   4. Why is net profit always lower than gross profit? (2 marks) Net profit includes the cost of administration, sales, and interest where the gross profit does not..
   5. Explain the importance of working capital to a business. (4 marks) Working capital shows the liquid equity in the company look at item 2)
   6. Suggest and explain a suitable objective for each of the following types of businesses:
   (a) sole traders Usually a small business that has a relatively easy product to market and obtain. Objective is to keep the products moving and costs low.
   (b) public limited companies Medium size companies or smaller companies with a more complex operation than the sole trader. There objective is longer term stability, increased profit and always lower costs.
   (c) public corporations (6 marks) These are larger companies often with several operations or division. The objectives are often longer term but similar to the smaller companies. There is often more concern about market and market share.
   7. State and explain 2 disadvantages that face those in a partnership. (6 marks) 2 owners – often rely on the ability to get along in managing a company. stability – since there is two partners there is a concern if one leaves that a new partner can’t be replaced and the other partner would not be financially able to go alone.
   8. Explain why the following groups would be interested in a businesses activities:
   (a) banks – banks often have a financial interest in the company because of loans. So the way the company runs the operation will have an affect on the ability to pay off the loans.
   (b) shareholders (4 marks) Share holders also have a financial risk that the profitability of the company has an effect on the price of the stock and the ability to sell the stock.
   9. State and explain two advantages for a business of growing larger. Economics of scale – a large part of costs do not vary with sales – so with increased sales affects the profits more dramatically. Markets often get happier when a company is larger and more stable.