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What happens if a business takes out too many loans?
Paying more in interest
More profits
Increased sales
To avoid over-borrowing what could a business owner do instead of taking too many loans?
Sell shares
Lower product prices
Cut employee wages
What can seasonal businesses do to survive in off-seasons?
Stop selling products during the off-season
Plan carefully to manage costs
Increase their marketing budget
What might happen if a business faces unexpected expenses like broken equipment?
They will be able to continue business as usual
The business will immediately make a profit
They could run into financial trouble
Which of the following is an example of an unexpected expense?
Emergency equipment repairs
Routine office supplies
Regular staff salaries
Which of the following is an example of an external factor that could harm a business?
Increased staff training
New laws
A new marketing campaign
How can changing customer tastes affect a business?
It can help increase sales
It does not have any impact on a business
It can hurt cash flow if not adapted to
What might happen if a business owner does not manage money properly?
They may spend more than they have leading to cash flow issu
They can easily expand their business
They will always have enough money
What is a key part of good financial management?
Spending as much as possible on advertising
Understanding money flow in and out of the business
Ignoring financial records
What is a risk of giving customers too much credit (letting them pay later)?
The business might lose less money
Customers might pay sooner than expected
The business may run out of cash if payments are delayed
How can a business avoid the risks of giving too much credit?
Increase credit limits for everyone
Offer discounts for delayed payments
Require immediate payment
What does "overtrading" mean for a business?
Growing too fast without enough cash to support it
Having too many employees
Staying small to keep costs low
What can happen to a business if it overtrades?
It may spend more than it can handle leading to financial tr
It can easily make more profits
It will never have cash flow issues
What might happen if a business invests too much in fixed assets (e.g. equipment)?
It will have more cash flow
It will make immediate profits
It may drain cash reserves
Instead of investing too much in equipment what can a business do to save money?
Stop buying any equipment
Hire more employees
Lease equipment
What is the main reason businesses need to manage their finances carefully?
To avoid paying taxes
To spend as much as possible
To make sure they have enough cash for operations
