Bedayia International School

Humanities department
Grade 10

Review Pack

3.1
Sources of finance

Expenditures Internal sources External sources

Capital Banks
Retained profit
expenditure - Loan capital
- Over drafts

personal funds Other businesses

Revenue - Trade credit
expenditure - Leasing
- Debt factoringh

Sale of assets Investors

- Share capital
- Venture capitalist
- Business angels

Government
- Grants
- Subcidies
Bedayia International School
Humanities department
Grade 10

Choose the correct answer:

1- A financial assistance to support business enterprises that are in the
public interest
a- Bank loan
b- Trade credit
c- Subsidies
d- Grants

2- Money spent on the day to day operations

a- Expenditure
b- Capital expenditure
c- Revenue expenditure
d- Over heads

3- Which of the following is not provided by banks

a- Trade credit
b- Loan capital
Bedayia International School
Humanities department
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c- Overdrafts
d- Debt factoring

4- A type of interest that doesn’t fluctuate for the entire term of loan
a- Fixed interest
b- Variable interest
c- Semi - variable interest
d- Simple interest rate

5- The credit period offered by most creditors usually lasts

a- 30 to 90 days
b- 180 days
c- 30 t0 80 days
d- 30 days

6- Provides financial capital to small startups or entrepreneurs

a- Venture capitalists
b- Business angels
c- Investors
d- Debt factors

7- The amount of debt immediately paid by the debt factoring company

a- 50% – 60%
b- 80% – 90 %
c- 10% – 20%
d- 20% – 30%

8- The maximum amount the shareholders of a company intend to raise

is called
a- Equity capital
b- Authorized shares
c- Stock exchange
Bedayia International School
Humanities department
Grade 10

d- Debt capital

9- The ploughed back profit that is used to reinvest in the business is

a- Personal funds
b- Gross Profit
c- Retained profit
d- Operating profit

10- When the business sells the asset to a specialist firm then
leases the asset back to the business, this is called
a- Sale of assets
b- Lease back
c- Sale of fixed assets
d- Sale of unused assets

Answer the following questions:

1- Explain the finance lease.
Definition: the finance lease means to rent a needed equipment for your business and to have
the option to purchase at the end of the term
Example: An open-ended vehicle lease

2- Explain why the business angels Is a favorable financial term.

They usually invest in the entrepreneur starting the business rather than the viability
of the business.

3- Distinguish between capital expenditure and revenue expenditure.

Revenue expenditures is the costs that should be paid within less than 1 year, such as rent,
salaries, and taxes, however, capital expenditures is the cost that should be paid each year or
more, such as building, machines, and equipment.

4- Evaluate a company’s decision to raise finance from a bank loan

rather than an over draft
Definition: a bank loan is an amount of money taken from the bank that
should be paid back after a specific time period with interest rates.
Bedayia International School
Humanities department
Grade 10

Advantages: a bank loan provides a huge amount of money, and long

term payments.

Disadvantages: the high interest rates, and the collateral needed

Opinion: I believe that according to the company financial situation we

can decide so, if it needs a large sum of money and they have fixed
assets the bank loan will be a good option, but if they need a small
amount for a short time period they can go for the over drafts
-

Case study:-

Two US companies – different sources of finance the financial differences

between two of the USA’s biggest companies could not be greater. The
globally recognized brands of General Motors (GM) and Coca-Cola face
very different futures too. The soft drinks company announced record
sales and profits for the three months to October 2008 – net profits
exceeded $1.8 billion! It has over $5 billion in cash with high profit margins
and its share price has not slumped in the same way as that of most
companies during the global recession. It can afford to launch more new
products and enter new markets without the need to borrow or sell
further shares. In contrast, General Motors is in deep trouble. Its share
price to a 60-year low in November 2008 – just $3.36. Some analysts fell
believe the price could fall to below $1 a share, so to try to raise finance
from selling new shares would be pointless – who would want to buy
them? The company already has $300 billion of debt and it made a huge
loss of $4.2 billion in just three months. It is selling assets – closed factory
Bedayia International School
Humanities department
Grade 10

sites, for example – to raise funds, and has also appealed to the US
government for emergency finance. GM already has access to $25 billion
of cheap US government loans and grants to help it over the current crisis.

- List all of the possible sources of business finance contained in this case
study.
 Share capital
 Grants

1- Explain why Coca-Cola able to finance expansion without loans or

selling shares?

 Coca cola is achieving high profit margin and it has high share price

2- List the advantages of this?

- Coca cola won’t need to raise finance
- Coca cola can use it’s retained profits
- Coca cola will expand without debts

3- Do you think that the US government should provide more financial aid
to General Motors?
- From my point of view The government should provide them with
needed finance to save the company, however they can benefit from
GM by forcing them to open in unemployment areas

4- What impact does it have on a public limited company if its share price
falls rapidly?
- If the stock price falls too much, then the company may need to
borrow money to raise funds to expand the business. The share price
can also impact financing from banks.
Bedayia International School
Humanities department
Grade 10

3.2 costs, revenues, and break even

Types of costs Total revenue

Variable Rental income

Sale of fixed asset

Fixed

divdends
Semi-variable

intrest on deposits
Direct
Bedayia International School
Humanities department
Grade 10

Choose the correct answer:

1- Refers to the total expenditure incurred by a business in order to run operations

a- Costs
b- Revenues
c- Profits
d- Direct costs

2- The difference between the total costs and the total revenue is called
a- Profits
b- Variable cost
c- Contribution
d- Margin of safety

3- Which of the following is not an example of fixed costs

a- Insurance
b- Rent
c- Interest rates
d- Raw materials

4- Overheads are
a- Direct costs
b- Indirect costs
c- Semi- variable
d- Costs
Bedayia International School
Humanities department
Grade 10

5- The cost of flour used in making bread in bakery is considered as

a- Direct cost
b- Indirect cost
c- Semi- variable cost
d- Expenses

6- Is the total amount of money a firm receives from its sales

a- Total cost
b- Total revenue
c- Profit
d- Indirect costs

7- Costs changes according to change in production

a- Fixed costs
b- Variable costs
c- Semi-variable costs
d- Revenue
8- What is an advantage of a bank loan?

a- Little or no interest
b- No collateral needed
c- You can pay in smaller instalments
d- You don’t have to return it back

9- Which of these facts about venture capitalists is NOT true?

a- Venture capitalists tend to operate in fairly risky markets

b- Venture capitalists would be paid a share of the profits
c- Venture capitalists usually provide money only and have no interest in running the
business
d- Venture capitalists usually invest large sums of money

10- Money raised from a bank loan is known as

a- Debt capital
b- Equity capital
c- Venture capital
d- Loan capital

11- Which of the following is not a suitable source for a well-established business.

a- Retained profits
b- Sale of assets
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c- Share capital
d- Personal funds

12- John’s company is facing a huge liquidity problem, he will have to

a- Sell the fixed assets

b- Sell unused assets
c- Announce his bankruptcy
d- Dismiss the employees

13- …………… is the finance spent on rent, salaries, and maintenance?

a- Revenue expenditure
b- Retained profits
c- Capital expenditure
e- Total revenue

14- Cost of raw materials is an example of

a- fixed cost
b- Variable cost
c- Indirect cost
d- None of the above
15- Costs that changes depending on output

a- Variable costs
b- Fixed costs
c- Total costs
d- Output
16- Costs that are not clearly identified with the production of specific goods and services

a- Indirect costs
b- Variable costs
c- Semi-variable costs
e- Direct costs

17- Which of the following not considered as a semi-variable cots

a- Overtime payments
b- Commissions
c- Internet subscription
d- Rent

Answer the following questions

 Bedayia International School
Humanities department
Grade 10

1- With reference to the automotive industry, distinguish between direct and indirect costs
The direct costs are the costs that are directly related to the product such as, car parts,
wheels, windows and motors, however, the indirect costs are not related to the production
Such as, salaries, taxes, and interest rates.

2- Explain the importance of the breakeven point

The breakeven point happens when the total revenue equals to the total cost,
It represents the minimum level of sales that must be achieved to generate a profit.

Case study

Quantity Price per box Revenue Fixed costs Variable Total cost Profit/loss
of candle costs
boxes
0 10$ 0 2000 0 2000 -2000

200 10$ 2000 2000 1200 3200 -1200

400 10$ 4000 2000 2400 4400 -400

600 10$ 6000 2000 3600 5600 400

800 10$ 8000 2000 4800 6800 1200

1000 10$ 10000 2000 6000 8000 2000

 Bedayia International School
Humanities department
Grade 10

1200 10$ 12000 2000 7200 9200 2800

Answer the following:-

1- Complete the profit and loss column

2- Calculate the variable cost per candle box.

Variable cost per unit = total variable cost = 1200= $6
Quantity 200
NOTE: choose any Total variable cost from the table and divide by it’s quantity

3- Draw a break even graph using the information in the table and show the break
even quantity

Break even quantity = TR = TC

= QxP = FC + VC
= $10 x Q* = 2000 + 6Q*
= 10Q* = 2000+6Q*
= 10Q* - 6Q* = 2000
= 4Q* = 2000
= Q* = 500
Revenues= Q x Price
= 500 x 10
= 5000

Operations Management
Bedayia International School
Humanities department
Grade 10

Choose the correct answer:

1- Which stage of production does operations management apply to?

A- Primary
B- Secondary
C- Tertiary
D- All of them
2- Operations management strategies and practices do not include?
A- Ecological sustainability
B- Economic social sustainability
C- Sustainability
D- Technological sustainability
3- …………….. encourages businesses to be more responsible in their use of resources
A- Social sustainability
B- Economic sustainability
C- Ecological sustainability
D- None of the above
Bedayia International School
Humanities department
Grade 10

4- Quaternary sector is sub-category of ……….. sector

A- Primary
B- Secondary
C- Tertiary
D- None of the above
5- Sustainability is a concept that promotes………..
A- Money
B- intergenerational equity
C- Peace
D- None of the above
6- “converting input into efficient outputs to achieve desired results” resembles to
A- Operations process
B- Financial plan
C- Human resources plan
D- Marketing plan
7- Extraction of raw materials is done in……………]
A- Primary sector
B- Secondary sector
C- Tertiary sector
D- Quaternary sector
8- The operations management is not about
A- Producing goods and services
B- Sustainability
C- Marketing
D- Production process
9- Goods are ……….. While services are……….
A- Tangible, intangible
B- Expensive, Cheap
C- Easy, Hard
D- Not stored, stored
10- Which of the following is not a role of operations management?
A- To investigate the most cost-effective production methods
B- To add value in the transformation process
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C- To hire the best employees

D- To ensure there are quality management process

Case study

Hong Kong’s environmental sustainability

Prior to July 2009, Hong Kong used an average of 30 million non-biodegradable plastic carrier bags
every day! For a relatively small population of 7 million people, this meant the average person in
Hong Kong was using more than four plastic carrier bags every day, often on a single-use basis. This
staggering figure meant that the country's landfills struggled to cope with the volume of plastic
carrier bags being thrown away. Hong Kong's introduction of a HK $0.50tax {6.5 US cents) on the
use of each carrier bag has encouraged people to use eco-friendly reusable shopping bags and be
aware of environmental sustainability. Demand for plastic carrier bags fell by 85%within the first
two days of the tax being introduced .The decision by law makers followed similar moves made in
other countries such as China (in2009) and Ireland (in2002).

(Source: adapted from South China Morning Post)

(a) Explain how important is the term “environmental sustainability” for Hong Kong?
Bedayia International School
Humanities department
Grade 10

- Environmental sustainability: the ability to maintain an ecological balance in our planet's

natural environment and conserve natural resources to support the wellbeing of current
and future generations
- It seems very important to Hong Kong, as Hong Kong's introduced $0.50tax {6.5 US cents)
on the use of each carrier bag which encouraged people to use eco-friendly reusable shopping
bags and be aware of environmental sustainability.

(b) Analyze how it can be possible that Hong Kong achieved Economic sustainability as well?

The economic sustainability is getting the maximum output by the lowest cost, and Hong Kong can
achieve economic sustainability by using reusable plastic bags, or fabric bags

Production methods

job Batch mass

production production production
Bedayia International School
Humanities department
Grade 10

Choose the correct answer:

1- Making a large quantity of identical products
a- Job
b- Batch
c- Mass

2- Making individual products that are bespoke (fit each customer's needs)
a- Job
b- Batch
c- Mass

3- Making different varieties of identical products. The production process is broken into stages
a- Job
b- Batch
c- Mass

4- Workers will be able to work at a very fast pace

a- Job
b- Batch
c- Flow
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5- Workers will get bored

a- Job
b- Batch
c- Flow
6- Productivity (output per worker per hour) will be high, so unit costs will be low.
a- Job
b- Batch
c- Flow

7- Workers are highly skilled and command high wages

a- Job
b- Batch
c- Flow

8- Customers have a choice of products but are products are not expensive
a- Job
b- Batch
c- Flow

9- The product is a one-off, made to order :

a- flow
b- batch
c- job

10- Benefit of capital intensive production :

a- requires skilled labor
b- can make a product to suit individual customer
c- a group of products is identifiable
d- low unit cost of production
Bedayia International School
Humanities department
Grade 10

Case study
Bristol Cars Ltd.
Bristol Cars Ltd. is a producer of luxury cars, founded in 1945 in Bristol,
UK. Only around 100 cars are made per year.

Each car is uniquely produced, allowing the firm to claim that the Bristol
Car is "Great Britain's most exclusive luxury car." The firm has no
distributors or dealerships.

Every part of the car is given the necessary time and attention to detail
to satisfy both the client and the company. Only when each task is done
to perfection can the highly skilled workers move onto the next task.

The cost of perfection means it can Stake a long time to produce each
car, but Bristol Cars Ltd. claims that "the car is produced for those who
can afford and appreciate the best". A designated sales person ensures
that each customer receives a highly personalized service, even after the
sale of the car.
Bedayia International School
Humanities department
Grade 10

1. Outline what is meant by 'Ltd, as in Bristol Cars Ltd.

private Limited company. In a limited company, shareholders' liability is limited to the
capital they originally invested. If such a company becomes insolvent, the
shareholders’ personal assets remain protected.

2. Explain the method of production used by Bristol Cars Ltd.

- Job production method: is a production method where only one product is completed at
a time. Each order is unique and meets the specific requirements of the customer
Example: each car is designed to meet the client exact needs

Examine the impact of this production method for Bristol Cars Ltd., its
employees, and its customers

The impact on employees

- High skilled labor
- Time consuming
- Low production
- Highly motivating

The impact on customers

- High customer satisfaction
- Customer engagement
- Higher prices