5.1.1 The Need for Finance The first part of the unit is an introduction to the fundamentals of finance. Shorter knowledge questions are more likely, however, make sure you have a clear understanding of the three different reasons businesses need finance, as this forms the building blocks of later more difficult questions.
Nearly everyone will be aware of the importance of a business making a profit and have a basic idea of how it’s calculated. However, cash-flow can be just as crucial for business success, as cash is the life blood of the business. Without enough cash the business will not survive. So it is essential as
Unsurprisingly as profit or “the bottom line” is the ultimate objective of nearly all business activity, questions on calculating profit or evaluating the profitability of different business decisions are hugely popular questions in both Paper 1 and Paper 2. But let’s start by answering the simple questions: what is profit and why is it so
The statement of financial position and the idea of balancing assets and liabilities is a difficult concept. However, for IGCSE you don’t need an detailed understanding of how the Statement of Financial Position is constructed. Furthermore, questions on this topic are much less popular than questions on profit or cash flow. What you do need
5.5.1 Concept of Importance of Profitability Link 5.3 Income Statements The concept and importance of profitability As we saw in Income statements, profit is a crucial business objective. Profitability takes this one step further. It measures how efficiently a business is making a profit. The magic tools that allow us to measure profitability are
