As a Former Classmate of Pepe's at the Nearby University

question 103

Multiple Choice

As a former classmate of Pepe's at the nearby university, you remind him what you both learned in your small business management class several years ago. What would you remind him?

• A) Restaurants are easy to start up, but difficult to keep going.
• B) Restaurants are probably the most difficult type of business to start up, due to the labor-intensive aspects of the business.
• C) Experts believe that restaurants have a high profit potential, due the fact that there is not much direct competition.
• D) Restaurants are easy to start up and have great profit potential.

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Definitions:

Net Operating Income

A company's operating profit after subtracting operating expenses from revenue, excluding non-operating activities like taxes and interest.

Break-even Point

The financial analysis point at which total revenues equal total costs, resulting in no profit or loss.

Target Profit

The anticipated profit a business aims to achieve within a specific period, guiding pricing and production decisions.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.