7.3 Financial Information & Business Performance Practice Questions

Marrowby Pottery Ltd

Marrowby Pottery Ltd makes handmade mugs and bowls in a workshop in Cornwall. The owner, Ines Calloway, sells them through the business's website and at craft fairs. Most sales are made in November and December, before Christmas.

In 2025 Marrowby's clay and glaze supplier raised its prices. Ines also hired an extra potter so that the business could take larger orders from gift shops. A rival pottery started selling similar mugs online at lower prices.

Ines has used the figures in Table 1 to judge how well the business performed in 2025. She wants to use them to decide whether to open a second workshop.

Table 1: Marrowby Pottery Ltd financial information

	2024	2025
Sales revenue	£240 000	£280 000
Cost of sales	£96 000	£126 000
Expenses	£120 000	£133 000
Net profit	£24 000	£21 000

Nordhaus Living

Nordhaus Living sells flat-pack furniture online to customers in nine European countries. It has no stores; orders are packed and delivered from two warehouses. Its best-selling two-seater sofa sells for £320. Last year its sales revenue was £85 million.

Nordhaus has grown quickly, but its finance director, Lena Vogt, is worried that costs are rising faster than revenue. Fuel prices have pushed up the delivery charges paid to courier firms, and the business has spent heavily on online advertising to compete with Casavia, the largest seller in the market.

Lena has bought a market research report that gives the information in Table 1. She wants to use it to help the board decide whether Nordhaus should cut its advertising spending or raise the price of its sofas.

Table 1: European online furniture market, last year

Business	Market share (%)	Net profit margin (%)
Casavia	28	4
Nordhaus Living	22	6
Fjordhem	15	9
All other businesses	35	Not available

Corvella plc

Corvella plc owns 240 pizza restaurants in the UK and the Republic of Ireland. It also sells chilled pizzas to two supermarket chains. It became a public limited company in 2019 and employs 6200 people.

In 2023 and 2024 Corvella plc opened 46 new restaurants, paid for by a bank loan of £40 million. Fitting out one restaurant costs about £750 000. Before choosing a town, the directors forecast the average annual profit of a new restaurant and calculate the average rate of return. They also compare the gross profit margin of every restaurant each month.

In 2024 the price Corvella plc paid for cheese and flour rose, and it increased the pay of its restaurant staff. The directors chose not to raise menu prices, as a rival chain was offering two pizzas for the price of one.

Customer satisfaction scores in the new restaurants are the highest in the chain, but many of them are in towns where Corvella plc was not previously known.

Table 1: Corvella plc financial performance

	2022	2023	2024
Sales revenue	£180.0m	£214.0m	£246.0m
Gross profit	£126.0m	£145.5m	£160.0m
Net profit	£21.6m	£23.5m	£19.7m