Business 7115 · O Level · 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 sell all of his products to a wholesaler. Paolo knows that the packaging for his products will be important. He has drawn up some financial and sales information. An extract from this information is shown in Table 1.1. Paolo is thinking about crowdfunding as a source of finance. He also knows that the business will need working capital.
(a)[2]
Define the term working capital.
(b)[2]
Calculate the average revenue per day. Show all your working.
(c)[4]
Outline two reasons why packaging will be important for Paolo’s business.
(d)[6]
Explain one advantage and one disadvantage for Paolo’s business of using crowdfunding as a source of finance.
(e)[6]
Do you think selling through a wholesaler is the best channel of distribution for a start-up business? 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 costs” …