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Marco Aliotta owns and runs a busy Italian restaurant in Cork City - Leaving Cert Business - Question A - 2020
Question A
Marco Aliotta owns and runs a busy Italian restaurant in Cork City. Marco employs ten full-time and six part-time staff. The restaurant offers a delivery service to ... show full transcript
Worked Solution & Example Answer:Marco Aliotta owns and runs a busy Italian restaurant in Cork City - Leaving Cert Business - Question A - 2020
Step 1
Step 2
Marco must abide by the insurance principles of Indemnity and Utmost Good Faith. Explain one of these principles.
Answer
Indemnity: A person cannot make a profit from an insurance claim. The primary purpose of insurance is to restore the insured party to their financial position before the loss occurred, ensuring that they do not gain any advantage financially from the situation.
Step 3
Step 4
Outline two benefits to Marco of preparing a cash flow forecast (cash budget).
Answer
- To highlight when there may be deficits (overspending), which will allow for timely actions like securing a bank overdraft.
- To establish a benchmark against which future performance can be compared, helping to maintain financial health.
Step 5
Step 6
Explain two factors that a bank would consider before giving a loan to a business.
Answer
- Capacity to repay: The bank will assess whether the business has the means to repay the loan based on its financial accounts.
- Credit history: The bank will check the business's past borrowing behavior to evaluate reliability in repaying loans on time.