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Kevin owns a garage and has a recovery truck - Leaving Cert Business - Question A - 2016
Question A
Kevin owns a garage and has a recovery truck. He employs seven people. Kevin received his annual insurance bill for the garage. He was disappointed to discover that ... show full transcript
Worked Solution & Example Answer:Kevin owns a garage and has a recovery truck - Leaving Cert Business - Question A - 2016
Step 1
Outline three types of insurance you would expect a business to have.
Answer
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Property / Buildings & Contents Insurance: This insurance protects against the cost of damage caused by fire, theft, or flood on premises. It ensures that any damage to the physical building and its contents can be repaired or replaced.
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Public Liability Insurance: This type of insurance provides protection against claims made by any member of the public who gets injured on the business's premises or as a result of the company's operations.
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Employers Liability Insurance: This insurance is essential as it covers claims made by employees for injuries or illnesses they may sustain while at work, ensuring businesses are protected from legal action.
Step 2
Outline two actions Kevin could take to reduce his insurance premium.
Answer
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Install Security Cameras/CCTV: Enhancing security measures can help reduce the risk of theft or damage, thus potentially lowering insurance premiums.
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Switch Insurance Provider: Shopping around for better rates or discounts with different insurance providers can lead to a more affordable premium.
Step 3
Step 4
Explain the term bank overdraft.
Answer
A bank overdraft is a financial agreement that allows account holders to withdraw more money than they have in their account, providing short-term funding flexibility. Overdrafts come with a limit, and interest is charged on the amount that is overdrawn beyond the balance available.
Step 5
Explain three factors that a bank would consider before giving a loan to a business.
Answer
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Ability/Capacity to Pay Back the Loan: The bank will assess the financial accounts and forecasts of the business to determine if it can repay the loan without financial strain.
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Credit History: The bank will review the business's credit history to ascertain reliability in repaying loans previously. A good credit history is essential for securing loans.
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Profitability: The bank will evaluate the business's financial performance, especially its ability to generate profit over the last few years, to assess loan viability.