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GCSE Business Studies-Edexel > 1.3 Putting a business Idea into practice > Flashcards

1.3 Putting a business Idea into practice Flashcards

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1
Q

what are aims?

A

Aims are overall goals that a business will want to achieve.

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2
Q

what are objectives?

A

Objectives are like mini aims which will help the business to achieve its overall aims.

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2
Q

what could be the financial aims of a business?

A

Survival, maximise profit, increase market share, maximise sales, Achieve financial security.

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3
Q

what could be the non-financial aims of a business?

A

Accomplishing a personal challenge, achieving personal satisfaction, gaining independence and control and doing what’s right for the society.

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4
Q

How are objectives more specific than aims?

A

They’re measurable steps on the way to the aim.

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5
Q

what factors could affect the aims and objectives of a business?

A

The size and age of the business, who owns the business, and the level of competition the business faces.

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6
Q

what is revenue?

A

Revenue is the income earned by a business.

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7
Q

what is the formula to calculate the revenue?

A

Revenue = quantity sold x price

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8
Q

what are costs in a business?

A

Costs are the expenses paid out to run the business.

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9
Q

what are some of the examples of fixed costs?

A

The rent, insurance, fixed salaries for employees, and advertising.

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10
Q

what are some of the examples for variable costs?

A

Factory labour, raw materials and running machinery.

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11
Q

what is the formula for the total variable cost?

A

Total variable cost = quantity sold x variable cost per unit

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12
Q

what is the formula for total costs?

A

total costs = total variable costs + total fixed costs

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13
Q

what is the formula to calculate interest on loans?

A

Interest on loans = total repayment - borrowed amount
—————————————————– x 100
borrowed amount

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14
Q

what is the formula to calculate profit?

A

Profit = Revenue - costs

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15
Q

what does breaking even mean?

A

Breaking even means covering your costs.

16
Q

what does break-even analysis allow businesses to do?

A

Break-even analysis allows firms to find out the minimum amount they need to sell to get by

17
Q

what is the formula to calculate the break even?

A

Break-even point in units = fixed cots
—————————————————–
sales price - variable cost (per unit)

18
Q

what is the second formula to calculate the break-even?

A

Break-even point for revenue (or costs) = break-even point units x sales price

19
Q

what is the margin of safety?

A

The margin of safety for a firm is the gap between the current level of output and the break-even output.

20
Q

what is the equation to calculate the margin of safety?

A

The margin of safety = actual sales (or budgeted sales) - break-even analysis.

21
Q

what will the firm use if it’s trying to forecast its future margin of safety?

A

margin of safety = actual sales (or budgeted sales) - break-even sales

22
Q

what will the firms do if it’s trying to forecast their future margin of safety?

A

the firm will use budgeted sales if it is trying to forecast its future margin of safety. The budgeted sales will be the sales that it expects to make.

23
Q

why are break-even diagrams useful?

A

It can be useful for seeing how changes in revenue and costs may affect the break-even output.

24
Q

why does a business need cash?

A

A business needs cash to pay its employees, its suppliers, overheads, rent and lighting

25
Q

what is a cash flow?

A

Cash flow is the flow of all money into and out of the business.

26
Q

what is the formula to calculate the net cash flow?

A

Net cash flow = Cash inflows - Cash outflows for a given period of time

27
Q

What does it mean if a company makes a profit?

A

It means that the company earns more money than it spends.

28
Q

What does a cash flow forecast show?

A

A cash flow forecast lists all the inflows and outflows of cash that appear in the budget.

29
Q

What could a lack of cash lead to?

A

A lack of cash could lead to the firm failing, because it may be unable to pay its debts =, unless it sells of its assets.

30
Q

what are the short-term sources?

A

Trade credit and overdrafts

31
Q

what are the long-term sources?

A

Loans, personal savings, share capital, venture capital, retained profit, and crowdfunding.

GCSE Business Studies-Edexel (6 decks)

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