Item A: HarbourHarvest operates six seafood restaurants. It is considering opening a seventh restaurant for an investment of £480,000. Forecast average annual profit is £57,600. HarbourHarvest's current net profit margin is 8%.
State one item of quantitative data HarbourHarvest could use when making the decision.
The forecast assumes 78% table occupancy. A three-month trial in the proposed town achieved 61% occupancy, while customer interviews praised the menu and location.
Calculate the forecast average rate of return for the seventh restaurant.
HarbourHarvest is considering two options:
Option 1: Open the seventh restaurant using the current forecast
Option 2: Run a longer trial and revise the forecast before deciding
Justify which one of these two options HarbourHarvest should choose.
37 exam-style questions on Edexcel GCSE Business 2.4 Making financial decisions, covering 2.4.1a Gross and net profit, 2.4.1b Margins and average rate of return, 2.4.2a Using quantitative business data, 2.4.2b Financial information: understanding performance, and 2.4.2c Financial information: making business decisions. Each one has a worked solution and a mark scheme showing where the marks go.