This increasing profitability worksheet can be used as a simple and easy recap of this part of the course. Most of this content we will have covered throughout the teaching of the unit.

 

As a Business student you probably hear your teacher talking about external factors, as well as business finance? Hopefully you share the same passion and interest in these topics, as they are so closely linked. If you actually think about what is happening in the wider world that we live in, you will be able to apply your business knowledge and make the connections.

One of the real factors that got me thinking was the way that the price of oil has decreased over the last few years. The price of oil has a massive impact on the level of disposable income that consumers have, mainly because this effects how much it costs us to fill up our cars. As petrol / diesel is seen as an in-elastic product (see my PED video if unsure on this term), when the price increases the cost of living (inflation) starts to increase. This is seen as a bad thing for an economy as consumers tend to save and not spend, when they lose confidence.

Below shows you how the price of petrol has massively reduced over the last few years;

 December 2015: £1.01 per L 
 April 2012: £1.42 per L

Let's look at how this data could impact on a business. Imagine that Bee works as a self-employed parcel delivery driver and is a sole trader. As a result Bee rents his own van from a leasing company and pays his insurance in a lump sum at the start of every year. Bee gets paid on average £0.50 for each parcel he delivers and on average Bee delivers 600 parcels each week. He has to fill his van up with petrol and typically will use 40L each week.

Bee has produced a budget to estimate how much profit / loss he would make based on the current Petrol prices of £1.01 per L.

Variable Costs : £1.01 per L x 40L = £40.40 per week x 52 = £2100.80 each year

Fixed Costs : £299 van rental per month x 12 months = £3588 each year + £560 yearly insurance = £4148 each year

Revenue : £0.50 per box x 600 boxes per week = £300 each week x 52 = £15,600 each year

If we calculate Bee's Gross and Net Profit based on these figures we get the following figures;

Revenue - Cost of Sales = Gross Profit

£15,600 - £2100.80 = £13,499.20

Gross Profit - Expenditure = Net Profit

£13,499.20 - £4148 = £9351.20

Bee has also produced a budget to estimate how much profit / loss he would make based on the 2012 Petrol prices of £1.42 per L.

Variable Costs : £1.42 per L x 40L = £56.80 per week x 52 = £2953.60 each year

Fixed Costs : £299 van rental per month x 12 months = £3588 each year + £560 yearly insurance = £4148 each year

Revenue : £0.50 per box x 600 boxes per week = £300 each week x 52 = £15,600 each year

If we calculate Bee's Gross and Net Profit based on these figures we get the following figures;

Revenue - Cost of Sales = Gross Profit

£15,600 - £2953.60 = £12,646.40

Gross Profit - Expenditure = Net Profit

£12,646.40 - £4148 = £8498.40

As we can see from looking at these figures the increase in the fuel prices has a real impact on the overall profit that Bee makes. The difference for this business would be £852.80. Of course in business Bee would probably have to look to make back this £852.80, which would only be possible if he could increase revenue, such as charging companies more for delivering each parcel or trying to reduce his other costs such as his van rental or insurance.

Hopefully you have followed the calculations and the concepts that have been covered in this article? The whole purpose is to highlight the impact that external factors have on a business and how different concepts, such as business finance can be linked into this.

This financial statements worksheet can be used to help support your knowledge and understanding of this challenging concept.

 

https://drive.google.com/file/d/0B7dgJ5m0MJyDTGtBYk14MExYdmc/view?usp=sharing

Your exam is fast approaching, however it is never too late to make the different to your chances of success. If you invest some time and effort into revision then the chances are you will reep the rewards in your exam grade. The one thing that will be certain is the fact that if you make little or no effort with your studies then you won't do very well.

Fail to Plan, Plan to Fail!

Below is a suggested revision timetable which you could adopt 8 days before you exam.

 Days to Go until Exam  8  7  6 5 4 3 2 1
 Business Topic to Cover  A.1 Business Cost  A.2 Revenue, Expenditure and Profit  B.1 Break Even B.2 Budgeting B.2 Cash Flow C.1 Income Statements and Statement of Financial Position Review any Weaker Topics of Choice General Overview focus on areas of weakness.
 Resources to Read, Watch, Take Notes From  

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

 

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

 

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

Unit 2 Finance Topic Lesson by Lesson Resources

Unit 2 Finance YouTube Playlist

Quizzes / Tests to Take  BeeBusinessBee Quizzes  BeeBusinessBee Quizzes  BeeBusinessBee Quizzes  BeeBusinessBee Quizzes  BeeBusinessBee Quizzes  BeeBusinessBee Quizzes  BeeBusinessBee Quizzes Attempt Mock Exam Again
Additional Activities to Undertake  Practice trying to think of the different costs that different types of business may have?  Practice explaing methods that a business could use to increase revenue and reduce expenditure.  Practice completing and calculating a break even chart. Also explaining the advantages and drawbacks of break even.  Practice completing budgets. Also explaining the advantages / drawbacks of budgeting for a business. Practice explaining how adjusting the timings of inflows / outflows could have an impact on the liquidty of a business.  Practice explaining what the data in the income statement is actually telling you about the performance of the business.  Practice explaining what the data in the statement of the financial position is telling you about the performance of the business. Try and find some reasons to justify both good and bad. Think about exam technique so if the question asks for "explain" ensure that you do this. Remember "assess" or "discuss" questions probably have more than one answer so practice using data to support your points.

This is only a suggeted plan and you may have your own more effective methods. However if not, this could be a useful business revision starting point.

Business Studies Mock Test

You are about to sit a mock Business Studies exam paper covering the topic of finance. This is on all of the content that we have covered so far in lessons. This test will have short answer, calculation and multiple choice questions from the topics below;

  • Revenue & Costs
  • Profitability (including types of profit)
  • Break Even
  • Cash Flow
  • Budgeting

You will have 50 mins to complete the test, which contains 73 questions. This time frame ensures that you get to experience the feel of working under pressure. The test will contain a timer, which will count down until closing the test when it reaches 0. Once you have completed all of the questions or you have reached the maximum time, your answers will be marked and you will be provided with instant feedback, question by question on how you have performed. Be sure to look at this to work out any areas of weakness that you may have.

A potential guide of scoring is shown below;

  • 80% + - Excellent, you know your knowledge and calculations, just ensure you now start thinking about longer answer questions
  • 70% - Good, you clearly know your stuff, however you should be focusing on developing those areas of weakness
  • 60% - Ok, not a bad score, however you should be considering reading back up on areas of weakness and attempting one of my targeted questions on these topics.
  • 50% - Its half marks, however reallly you want to be doing better than this. Practice areas of weakness and then take the quiz again.
  • 0% - Its not the best score in the world and shows that you have gaps in your knowledge. You need to ensure you are working on these and then take the test again to see if you have improved.

 What you need for the exam;

This is an electronic exam, however you can use a calclator and write things down on paper. Just ensure you take care when you transfer the figures from your paper to the answer box on the computer.

Revision Materials

There are plenty of revision materials that you have available. All of the lesson Presentations and Resources can be found online. In addition to this you have a copy of a revision guide and you may even find the videos on my YouTube Channel useful. Lastly you have plenty of practice questions that you can attempt online, all with instant feedback.

This presentation looks at the topic of Income Statements and introduces who uses these and how these are constructed.

 

This is a copy of the types of profit (Gross and Net) that I have given you for your homework over the half term holiday. If you have lost the sheet of paper then you can use this version of the worksheet.

 


This worksheet can be used to develop your knowledge and understanding of the topic of cash flow forecasting. You should complete this following the presentation that we have used on cash flow and my classroom example.

 


This presentation is a copy of the pairs matching game that I have used in lesson with you. If you wish to download and play this game at home or just use these cards with the key terms on then that is your own choice.

 


I have been asked quite a few questions about the BTEC Business First Award on-screen Unit 2 Finance Test. I have asked our exams officer to put your questions to the exam board and these are the answers that have been given to the questions you have asked.

Can you do your working / make notes on paper?

Yes, you can be provided with a blank piece of paper and make notes / use this to help with your calculations. You must however hand this in at the end of the exam.

Can you use your own calculator and not the on-screen one?

Yes, however normal exam rules apply to calculators. Remember that you need to type in carefully any calculations completed into the on-screen test.

How is the exam marked?

The exam is marked by a human and not a computer, this means you will have to wait a little longer than the instant feedback you get with my tests and practice questions.

When do I get the results?

The results will be sent to the centre around 28 - 52 days after you have completed the test.

When can I resit?

Hopefully you don't need to worry about this, however if you do then you can resit near enough as soon as you have had the results of your previous test. Remember you will have to pay for any resits.

What are the grade boundaries?

This is hard to say as it depends on the question bank that you face. One student could take a test which 25 out of 50 is a Pass grade, whereas someone else takes another test where 27 out of 50 will be a Pass grade. We are told this will be done fairly and should not cause too many issues.

Access Arrangements

If you are entitled to additional time or additional support in “conventional” exams, then these will apply with the BTEC exams. If you believe you should have access to this and it has not been organised by the centre, ensure you speak to the exams officer.

How long is the test?

The test is 1 hour long.

How many marks in total for the exam?

You will be asked questions that total 50 marks.

What does the actual test screen look like?

The following link shows you what the official on screen test will look like. You an even have an attempt at this sample paper, however it does not give you the answers at the end. http://www.edexcel.com/migrationdocuments/BTEC%20Firsts%20from%202012/BTEC%20Firsts%20online%20SAMs%20(Business).pdf

In this presentation we look at the concept of calculating budgets and the different types of budget that exist. We also look at how you calculate the variance for budgets.

 

This first lesson on the topic of budgeting looks at introducing the topic and getting you to understand some of the basic concepts that will be covered in this short but important unit.

 

This presentation pulls together all that we have covered in this topic of break even and focuses on developing your level of understanding of some of the more complex aspects of this topic.

 

This revsion booklet could come in useful in testing your level of knowledge and understanding of the topic of break even. You should be able to answer all of the sections in this booklet if you want to achieve the highest grade possible in your exam.

 

This break even activity has been designed to develop and improve your understanding of the topic of break even. You should complete the tasks in this presentation and hopefully by the end of this you will have a good level of understanding of this topic.

 

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