Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
Paolo is planning to launch a cake-making business. He intends to supply every product to a wholesaler. Paolo recognises that the packaging for his products will matter. He has put together some financial and sales information. An extract from this information appears in Table 1.1. Paolo is thinking about crowdfunding as a way to obtain finance. He also knows that the business will require working capital.
(a)[2]
Define the term ‘working capital’.
(b)[2]
Calculate the average revenue earned per day. Show your working.
(c)[4]
Outline two reasons why packaging matters for Paolo’s business.
(d)[6]
Explain one benefit and one drawback to Paolo’s business of using crowdfunding as a source of finance.
(e)[6]
Do you think selling to a wholesaler is the most suitable distribution channel for a start-up business to use? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Finance a business needs to meet day-to-day expenses” …