Numbers
Edexcel A-Level Business 9BS0
Meeting Customer Needs
Marketing Mix and Strategy
Managing People
Entrepreneurs and Leaders
Financial Planning
Managing Finance
Resource Management
External Influences
Business Objectives and Strategy
Decision-Making Techniques
Influences on Business Decisions
Assessing Competitiveness
Globalisation
Global Markets and Business Expansion
Global Marketing
Global Industries and Companies
Managing Finance
- 3 subtopics
- 17 things to know
- Paper 2 and Paper 3
What Managing Finance covers
Managing finance is the third section of Theme 2. It covers the difference between making a profit and having cash in the bank, the ratios that measure each, and what happens to a business that gets the second one wrong even while the first looks healthy.
Where it is assessed
Paper 2 and Paper 3
Theme 2, examined on Business activities, decisions and strategy, then the pre-released synoptic paper.
Check the Pearson Edexcel specification ↗The 3 subtopics
Each one has its own page.
- ProfitGross, operating and net profit and the margin for each, the statement of comprehensive income, the ways a business can improve profitability, and why profit and cash differ under the accruals concept.Open →
- LiquidityThe current and acid test ratios, working capital, and the actions that free up cash when a business is short of it.Open →
- Business failureThe financial causes such as poor cash flow, weak controls and excessive debt, and the non-financial causes such as inadequate marketing and no strategic plan.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Numbers
What is the statement of comprehensive income, and how is net profit found?
Numbers
What does the operating profit margin show, and how is it calculated?
Evaluation
How can a business improve its profitability?
Key term
At what point is profit recorded in the accounts?
Key term
What accounting concept is used to measure profit?
Numbers
What does the acid test ratio measure, and how does it differ from the current ratio?
Process
How can a business improve its liquidity?
Numbers
How can a business obtain cash quickly, and what is working capital?
Numbers
Why is cash important for a business's day-to-day operations?
Process
How do poor cash flow and weak financial controls cause failure?
Key term
What financial causes lead to business failure?
Key term
What non-financial causes lead to business failure?
Numbers
How do financial causes of business failure differ from non-financial causes?
Numbers
State the three profit formulas.
Numbers
State the three profit margin formulas.
Numbers
State the two liquidity ratio formulas.
Take Managing Finance further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Cash flow vs Profitability
Cash flow: movement of money into and out of a business. Profitability: ability to generate a surplus relative to sales or capital.
Current assets vs Current liabilities
Current assets: resources expected to become cash within one year. Current liabilities: amounts due for payment within one year.
Questions from this topic
Each one with the model answer underneath.
- 1
State the formula for calculating gross profit.
Model answer
Gross Profit = Revenue − Cost of Sales
- 2
What two components are subtracted from each other to determine gross profit?
Model answer
Revenue and cost of sales
- 3
Calculate the gross profit when revenue = £452,000, cost of sales = £313,000.
Model answer
Gross profit = 452000 − 313000 = £139,000.
- 4
State the formula for calculating operating profit.
Model answer
Operating Profit = Gross Profit − Operating Expenses
- 5
What is deducted from gross profit to arrive at operating profit?
Model answer
Operating expenses
- 6
Calculate the operating profit when gross profit = £270,000, operating expenses = £173,000.
Model answer
Operating profit = 270000 − 173000 = £97,000.
What is inside Levo
Six ways to work the same material.
Managing Finance revision questions
- What does Managing Finance cover in Edexcel A-Level Business?
- 3 subtopics: profit, liquidity and business failure. Each one has its own page with questions and model answers.
- How is Managing Finance organised?
- By the Edexcel 9BS0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Managing Finance, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
Or £46 a year, about £3.83 a month. Cancel anytime.