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Ricardo Costumes and Props (RCP) Alessia and Natalia own Ricardo Costumes and Props (RCP) - OCR - GCSE Business - Question 17 - 2021 - Paper 1
Question 17
Ricardo Costumes and Props (RCP) Alessia and Natalia own Ricardo Costumes and Props (RCP). The business operates as a partnership. RCP makes a range of costumes and... show full transcript
Worked Solution & Example Answer:Ricardo Costumes and Props (RCP) Alessia and Natalia own Ricardo Costumes and Props (RCP) - OCR - GCSE Business - Question 17 - 2021 - Paper 1
Step 1
State one reason why cash is important to a business.
Answer
Cash is essential for a business because it allows for the payment of day-to-day expenses such as salaries, rent, and utilities. Without sufficient cash flow, a business may struggle to operate effectively and meet its obligations, which could lead to insolvency.
Step 2
Explain one use of a cash flow forecast in a business.
Answer
A cash flow forecast is used to predict future cash inflows and outflows over a specific period. This helps businesses plan for potential shortfalls, ensuring there are enough funds available to cover expenses. It can also aid in budgeting and financial planning, allowing businesses to make informed decisions about investments and expenditures.
Step 3
Step 4
Step 5
Analyse one way Alessia and Natalia could use the data shown in Table 1 to improve their net profit margin.
Answer
Alessia and Natalia could analyze their highest costs, particularly salaries, which constitute a significant expense. By identifying opportunities to streamline operations or improve efficiency, they could potentially reduce salary expenses, thus enhancing their net profit margin. For example, they might choose to automate certain processes to reduce the number of staff needed.
Step 6
Analyse one advantage to RCP of selling its old machines to finance the purchase of the new machinery.
Answer
One advantage of selling old machines is that it can provide immediate cash flow, which can be used to partially fund the acquisition of new machinery without taking on debt. This improves liquidity and enables RCP to invest in more efficient equipment that may enhance productivity or lower operational costs.
Step 7
Analyse one disadvantage to RCP of selling its old machines to finance the purchase of the new machinery.
Answer
A disadvantage of selling old machines is that RCP may lose the ability to use them as a backup during periods of machine downtime or maintenance. This could disrupt production processes and potentially lead to lost revenue if new machinery fails or underperforms.