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Assess two ways Derby Theatre could improve its liquidity - Edexcel - A-Level Business - Question 2 - 2022 - Paper 3
Question 2
Assess two ways Derby Theatre could improve its liquidity. Liquidity refers to day-to-day cash-flow.
Worked Solution & Example Answer:Assess two ways Derby Theatre could improve its liquidity - Edexcel - A-Level Business - Question 2 - 2022 - Paper 3
Step 1
Discounting Performance Tickets
Answer
One way Derby Theatre could improve its liquidity is through discounting performance tickets. By offering lower prices, the theatre may increase the number of attendees, assuming there is sufficient demand. This can lead to higher cash inflows on performance days, thus enhancing their immediate cash flow situation.
Step 2
Increasing Sources of Advertising and Sponsorship
Answer
Another method to enhance liquidity is by increasing advertising in performance programmes or by seeking additional sponsorships. This could involve establishing loyalty or membership schemes that attract regular visitors. The additional revenue generated from these avenues would help in creating a more stable cash flow for Derby Theatre.