NORRIS TEST

Question 1

What is Peer to Peer Lending?

Answer 1

where INDIVIDUALS LEND to other individuals WITHOUT PRIOR KNOWLEDGE of them, on the INTERNET

Question 2

What are 2 Benefits of Peer to Peer Funding?

Answer 2

• EASY ACCESS , CONVENIENT, business can get ACESSS to funding WITHIN A WEEK once approved
• INTEREST RATES are BETTER for both borrowers and lenders THAN those offered by a bank

Question 3

How do you find the Closing Balance in a cash flow forecast?

Answer 3

Closing Balance = Net Cash Flow + Opening Balance

Question 4

What is Sales Forecasting?

Answer 4

it ESTIMATES the VOLUME or VALUE of future sales using market research or past sales data

Question 5

What are 3 purposes of Sales Forecasting?

Answer 5

• STOCK CONTROL
• HUMAN RESOURCES - to employ more workers to cope with seasonal DEMAND
• avoid cash flow problems

Question 6

What are 3 factors that affect Sales Forecasts

Answer 6

1. Consumer Trends
2. Economic Variables
3. Action of Competitors

Question 7

What is ACID TEST RATIO?

Answer 7

A MORE SEVERE test of liquidity as it’s similar to current ratio but EXCLUDES STOCK FROM CURRENT ASSETS

Question 8

What is the formula for Acid Test Ratio?

Answer 8

ATR = ( CURRENT ASSETS - INVENTORY ) / CURRENT LIABILITIES

Question 9

What is Liquidity?

Answer 9

The ABILITY of a business to TURN its ASSETS INTO CASH to pay its current liabilities

Question 10

What is the Formula for Current Ratio

Answer 10

CR = Current Assets / Current Liabilities

Question 11

What are 3 Ways that LIQUIDITY can be IMPROVED?

Answer 11

• REDUCE the amount of STOCK IT HOLDS, goods dispatched faster to customers, FEWER STOCK can INCREASE CASH
• EXTEND CREDIT with selected SUPPLIERS - saved cash by delaying payments
• REDUCING CREDIT OFFERED to customers e.g. insisting customers pay in 30 days not 90

Question 12

What does a BALANCE SHEET show?

Answer 12

it’s shows FINANCIAL POSITION

it’s a document that provides SUMMARY of it’s ASSETS, LIABILITIES and CAPITAL

Question 13

What is PROFIT?

Answer 13

the FINANCIAL GAIN of a business through trading and can be found be deducting expendixture from income

Question 14

What are 3 Ways to Improve Profitability?

Answer 14

• REDUCE COSTS
• INCREASE REVENUE
• using existing resources more EFFICIENTLY

Question 15

What are the IDEAL RATIOS?

current and acid

Answer 15

Current = 2:1
Acid = 1:1