Business Studies Multiple Choice Question – 28 January 2022

Bubbly Drinks manufactures a wide range of fizzy drinks that are sold around Staffordshire.

Its most popular drink is still the original Bitter Lemonade, which is a cash cow.

A cash cow is important to Bubbly Drinks because it?

Select ONE answer:

1. generates a significant amount of revenue
2. is new on the market
3. has a high market share and a high rate of growth
4. generates all of Bubbly Drink’s profits

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Cash cows are mature products with a high but stable market share/low growth. Cash cows are important because they can be ‘milked’ for cash/revenue. Bubbly Drinks bring out new flavours of fizzy drinks every year and their development is funded by the profits from the cash cow.
2. Not correct – products which are new on the market are called question marks/problem child and it is uncertain as to how successful they will be.
3. Not correct – cash cows do not have a high rate of growth as their growth tends to be slow and steady over time.
4. Not correct – cash cows do not generate all the profits for a business and star products such as Ginger Beer/other Bubbly Drinks drinks can also generate a significant amount of profit.

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