Lesson 3.5.1

3.5.1 Setting financial objectives Quiz: AQA Business, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.5.1, Setting financial objectives: 20 multiple choice questions for the AQA Business (7132), Unit 5: Financial management, written with Revision Ninja.

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The 20 questions

  1. Return on investment (ROI) is:

    • The amount of cash paid out to shareholders in dividends
    • The profit earned from an investment, expressed as a percentage of the amount invested
    • The total revenue generated by a business in a year
    • The number of years it takes to repay a loan

  2. Cash flow differs from profit because cash flow:

    • Is always higher than profit in every business
    • Records the timing of money coming in and going out, not accruals such as credit sales
    • Includes only fixed costs, while profit includes all costs
    • Is calculated from the balance sheet, not the cash flow statement

  3. Gross profit is calculated as:

    • Revenue minus total operating expenses
    • Revenue minus tax paid
    • Revenue minus cost of sales
    • Operating profit minus interest

  4. Operating profit is:

    • The cash balance at the end of the year
    • Gross profit minus operating expenses, such as administration and distribution costs
    • Revenue minus cost of sales and tax
    • Profit after interest and tax have been deducted

  5. Profit for the year is:

    • Operating profit before interest and tax
    • The profit remaining after all costs, including interest and tax, have been deducted from revenue
    • Cash in the bank at year end
    • Gross profit before any expenses are deducted

  6. A cash flow objective might be:

    • To improve brand loyalty among existing customers
    • To reduce the number of employees by 20%
    • To maximise the value of the business's share capital
    • To keep the cash balance positive at all times so that bills can be paid when due

  7. Revenue objectives set by a business:

    • Specify the rate at which employees' wages will be raised
    • Specify the amount of tax to be paid by the business
    • Specify the number of shares the business will issue
    • Specify a target for sales income over a period, such as 2 million a year

  8. A business invests 200,000 and earns a profit of 30,000 from it. What is the ROI?

    • 30%
    • 15%
    • 6.7%
    • 150%

  9. A business has revenue of 800,000 and cost of sales of 500,000. What is its gross profit?

    • 300,000
    • 1,300,000
    • 500,000
    • 200,000

  10. A business has gross profit of 300,000 and operating expenses of 180,000. What is its operating profit?

    • 300,000
    • 480,000
    • 120,000
    • 180,000

  11. A business has operating profit of 120,000, interest of 20,000 and tax of 25,000. What is its profit for the year?

    • 95,000
    • 145,000
    • 120,000
    • 75,000

  12. A business makes a 50,000 profit but has only 5,000 in the bank because customers pay after 90 days. What explains this?

    • Cash is recorded only from loans
    • Profit is recognised when sales are made, but cash arrives only when customers pay
    • Cash excludes all sales revenue
    • Profit is calculated after dividends are paid, which reduces cash

  13. A business sets an objective of achieving a 15% ROI. Which information must it track?

    • The number of social media followers only
    • The colours used in product packaging
    • The number of employees and their ages
    • Profit and the capital invested, in order to calculate ROI

  14. A firm's revenue objective is 1.2 million. Current revenue is 900,000 and grows by 10%. Is the objective met?

    • No, revenue would be 990,000, short of the 1.2 million target
    • No, because revenue cannot grow at all
    • Yes, the target would be exceeded by 300,000
    • Yes, because 10% growth always meets targets

  15. Which profit measure is most useful for comparing production efficiency before overheads?

    • Gross profit
    • Operating profit
    • Profit for the year
    • Net cash flow

  16. Evaluate: what is the best argument that a business with high profit can still face failure?

    • High profit guarantees the business cannot fail
    • Profit has no relation to cash in any business
    • Failure only comes from excessive profit
    • Cash shortages can prevent payments to suppliers and staff even when profit is high, so liquidity must be managed

  17. A business has revenue of 1,000,000 and cost of sales of 640,000. What is its gross profit margin?

    • 36%
    • 40%
    • 360%
    • 64%

  18. A business has an investment of 500,000. Its operating profit is 100,000, interest is 10,000 and tax is 22,000. What is the ROI based on profit for the year?

    • 10%
    • 17%
    • 20%
    • 13.6%

  19. Why might a financial objective of maximising profit conflict with a cash flow objective?

    • Maximising profit always increases cash balances immediately
    • Investing in stock or offering credit to boost profit can tie up cash, so the business may run short
    • Profit and cash flow are always identical, so objectives never conflict
    • Cash flow objectives apply only to public sector bodies

  20. A business has revenue of 2,500,000 and operating profit of 375,000. What is its operating profit margin?

    • 15%
    • 37.5%
    • 18%
    • 12%

All AQA Business quizzes