BTEC LEVEL 3 BUSINESS 2026 STUDY GUIDE QUESTIONS
AND SOLUTIONS RATED A+
✔✔Debt Factoring - ✔✔(External) This is when an invoice financier will buy a debt owed
to a business by a customer and collect the money themselves. They pay the business
around 85% of the money owed by the customer. Once they receive the money from
the customer they pay the business the remaining balance - with the business paying
fees.
✔✔Hire Purchase - ✔✔(External) Often used by small businesses as a way of buying
machinery. A down payment may be required and then the business would repay the
remainder of the price on instalments over a period of time
✔✔Peer to Peer Lending - ✔✔(External) This method allows individuals to gain money
without having to go through a bank or financial institution. Many websites have been
set up to match individuals lenders and borrowers online
✔✔Sale of assets - ✔✔(Internal) a business may be able to sell certain assets within the
business in order to raise finance. for example, machinery, land and buildings.
✔✔Loans - ✔✔(External) This is borrowed from a bank and must be repaid over a set
amount of time in regular instalments
✔✔Crowd Funding - ✔✔(External)A large number of people to raise money in order to
fund a project
✔✔Leasing - ✔✔(External) a business will gain the use of particular resources such as,
property, machinery in return doe regular payments. The business never owns the
resource
✔✔Donations - ✔✔(External) Money or goods that are given to help an organisation
✔✔Trade Credit - ✔✔(External) A business will buy raw materials or fuel and pay for
them at a later date, usually within 30-90 days
✔✔Grants - ✔✔(External) An amount of money that is given to an individual or a
business for a specific project or purpose
✔✔Mortgages - ✔✔(External) Usually a long term loan from a bank. The lender would
need to use land or property as security on the loan
✔✔Venture Capital - ✔✔(External) A type of funding for new or growing businesses.
This type of funding is provided by private investors
, ✔✔Net Cash Flow - ✔✔Total Cash Inflow - Total Cash Outflow
✔✔Closing Balance - ✔✔Opening balance + Net Cash Flow
✔✔Total Revenue - ✔✔Selling Price X Quantity Sold
✔✔Total Costs - ✔✔fixed costs + total variable costs
✔✔Profit - ✔✔Total Revenue - Total Costs
✔✔Total contribution - ✔✔Sales Revenue - Total Variable Costs
✔✔Contribution (Per Unit) - ✔✔Selling Price - Variable Costs
✔✔Profit (using contribution) - ✔✔Contribution per unit x margin of safety
✔✔Break even output - ✔✔Fixed costs / contribution per unit
✔✔Margin of Safety - ✔✔Actual sales - break even level of output
✔✔Revenue - ✔✔Unit price X Quantity Sold
✔✔Gross Profit - ✔✔Sales revenue - cost of goods sold
✔✔Costs of goods sold - ✔✔Opening inventory + purchases - closing inventory
✔✔Profit/Loss of the year - ✔✔Gross profit - expenses + other income
✔✔Net Book value - ✔✔cost - depreciation
✔✔Net Current Assets - ✔✔current assets - current liabilities
✔✔Net assets - ✔✔Non current assets + net current assets - long term liabilities
✔✔Capital employed - ✔✔Opening Capital + Profit of the Year
✔✔Balance sheets - ✔✔net assets - capital employed
✔✔Gross Profit Margin - ✔✔Gross profit/sales revenue x 100
✔✔Mark Up - ✔✔Gross profit / cost of sales x 100
✔✔Profit Margin - ✔✔Profit/Revenue x 100
AND SOLUTIONS RATED A+
✔✔Debt Factoring - ✔✔(External) This is when an invoice financier will buy a debt owed
to a business by a customer and collect the money themselves. They pay the business
around 85% of the money owed by the customer. Once they receive the money from
the customer they pay the business the remaining balance - with the business paying
fees.
✔✔Hire Purchase - ✔✔(External) Often used by small businesses as a way of buying
machinery. A down payment may be required and then the business would repay the
remainder of the price on instalments over a period of time
✔✔Peer to Peer Lending - ✔✔(External) This method allows individuals to gain money
without having to go through a bank or financial institution. Many websites have been
set up to match individuals lenders and borrowers online
✔✔Sale of assets - ✔✔(Internal) a business may be able to sell certain assets within the
business in order to raise finance. for example, machinery, land and buildings.
✔✔Loans - ✔✔(External) This is borrowed from a bank and must be repaid over a set
amount of time in regular instalments
✔✔Crowd Funding - ✔✔(External)A large number of people to raise money in order to
fund a project
✔✔Leasing - ✔✔(External) a business will gain the use of particular resources such as,
property, machinery in return doe regular payments. The business never owns the
resource
✔✔Donations - ✔✔(External) Money or goods that are given to help an organisation
✔✔Trade Credit - ✔✔(External) A business will buy raw materials or fuel and pay for
them at a later date, usually within 30-90 days
✔✔Grants - ✔✔(External) An amount of money that is given to an individual or a
business for a specific project or purpose
✔✔Mortgages - ✔✔(External) Usually a long term loan from a bank. The lender would
need to use land or property as security on the loan
✔✔Venture Capital - ✔✔(External) A type of funding for new or growing businesses.
This type of funding is provided by private investors
, ✔✔Net Cash Flow - ✔✔Total Cash Inflow - Total Cash Outflow
✔✔Closing Balance - ✔✔Opening balance + Net Cash Flow
✔✔Total Revenue - ✔✔Selling Price X Quantity Sold
✔✔Total Costs - ✔✔fixed costs + total variable costs
✔✔Profit - ✔✔Total Revenue - Total Costs
✔✔Total contribution - ✔✔Sales Revenue - Total Variable Costs
✔✔Contribution (Per Unit) - ✔✔Selling Price - Variable Costs
✔✔Profit (using contribution) - ✔✔Contribution per unit x margin of safety
✔✔Break even output - ✔✔Fixed costs / contribution per unit
✔✔Margin of Safety - ✔✔Actual sales - break even level of output
✔✔Revenue - ✔✔Unit price X Quantity Sold
✔✔Gross Profit - ✔✔Sales revenue - cost of goods sold
✔✔Costs of goods sold - ✔✔Opening inventory + purchases - closing inventory
✔✔Profit/Loss of the year - ✔✔Gross profit - expenses + other income
✔✔Net Book value - ✔✔cost - depreciation
✔✔Net Current Assets - ✔✔current assets - current liabilities
✔✔Net assets - ✔✔Non current assets + net current assets - long term liabilities
✔✔Capital employed - ✔✔Opening Capital + Profit of the Year
✔✔Balance sheets - ✔✔net assets - capital employed
✔✔Gross Profit Margin - ✔✔Gross profit/sales revenue x 100
✔✔Mark Up - ✔✔Gross profit / cost of sales x 100
✔✔Profit Margin - ✔✔Profit/Revenue x 100
