2 (a) Which two of the following are external sources of finance? Select two answers. ☐ A Loan capital ☐ B Retained profit ☐ C Sales revenue ☐ D Selling assets ☐ E Share capital (b) Which two of the following are methods of external growth for a business? Select two answers. ☐ A Improve promotion ☐ B Innovation ☐ C Merger ☐ D Research and development ☐ E Takeover (c) Using the information in Table 1, calculate the gross profit made by the business. You are advised to show your workings. £ ______________________ (d) Explain one benefit to a business of withdrawing a product when it enters the decline phase of its product life cycle. (e) Explain one benefit to a business from improving the aesthetic element of a product's design mix.

GCSE Edexcel Business Business growth: 2 (a) Which two of the following

2 (a) Which two of the following are external sources of finance? Select two answers - Edexcel - GCSE Business - Question 2 - 2020 - Paper 1

Question 2

2 (a) Which two of the following are external sources of finance? Select two answers. ☐ A Loan capital ☐ B Retained profit ☐ C Sales revenue ☐ D Selling assets ☐ E... show full transcript

Worked Solution & Example Answer:2 (a) Which two of the following are external sources of finance? Select two answers - Edexcel - GCSE Business - Question 2 - 2020 - Paper 1

Step 1

Which two of the following are external sources of finance?

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Answer

The correct answers are A - Loan capital and E - Share capital. Loan capital refers to funds borrowed from external sources, while share capital is money raised by issuing shares. Retained profit, sales revenue, and selling assets are considered internal sources of finance.

Step 2

Which two of the following are methods of external growth for a business?

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Answer

The correct answers are C - Merger and E - Takeover. A merger involves two companies joining together to form one, while a takeover refers to one company acquiring another. Improve promotion, innovation, and research and development are methods of internal growth.

Step 3

Using the information in Table 1, calculate the gross profit made by the business.

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Answer

To calculate the gross profit, we use the formula:

$ext{Gross Profit} = ext{Sales Revenue} - ext{Cost of Goods Sold}$

Assuming sales revenue is £625,000 and cost of goods sold is £145,000:

Gross Profit = £625,000 - £145,000 = £480,000.

Step 4

Explain one benefit to a business of withdrawing a product when it enters the decline phase of its product life cycle.

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One benefit is that the business can reallocate resources to more profitable products. By withdrawing a declining product, management can focus on products that are performing well, thereby increasing overall profitability and potentially returning greater retained profits for investment in new opportunities.

Step 5

Explain one benefit to a business from improving the aesthetic element of a product's design mix.

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Answer

Improving the aesthetic appeal of a product can make it more attractive compared to competitors. An aesthetically pleasing product can lead to increased customer interest and higher sales. This, in turn, allows the business to potentially charge a premium price, enhancing its profit margins.

2 (a) Which two of the following are external sources of finance? Select two answers - Edexcel - GCSE Business - Question 2 - 2020 - Paper 1

Worked Solution & Example Answer:2 (a) Which two of the following are external sources of finance? Select two answers - Edexcel - GCSE Business - Question 2 - 2020 - Paper 1

Which two of the following are external sources of finance?

Which two of the following are methods of external growth for a business?

Using the information in Table 1, calculate the gross profit made by the business.

Explain one benefit to a business of withdrawing a product when it enters the decline phase of its product life cycle.

Explain one benefit to a business from improving the aesthetic element of a product's design mix.

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