1.3 - Putting A Business Idea Into Practice Flashcards
Business aims and objectives, Business revenues/costs/profits, Break Even, Cash and Cashflow and Sources of business finance
What is the difference between a business aim and objective?
-An aim is what a business hopes to achieve in the long-term.
-An objective is more specific and is the short-term target, in order to achieve their aim.
What are some financial aims and objectives?
-Survival
-Profit
-Market Share
-Financial Security
What are some non-financial aims and objectives?
-Social Objectives
-Personal Satisfaction
-Challenge
-Independence
-Control
Why might business aims and objectives differ between businesses?
-A newer business may focus on survival since they won’t have a steady cashflow nor a loyal customer base.
-What are the ways to calculate revenue?
-Revenue=Selling price x No. of units sold
-Revenue=Profit+Total Costs
How do you calculate fixed costs and variable costs?
-Fixed costs doesn’t change according to the output.
-Variable costs=Variable cost per unit x No. of units sold
How do you calculate total costs?
Total costs=Fixed costs+Variable costs
How do you calculate profit and loss?
-Profit=Revenue-Total costs
-When total costs are greater than revenue the business, the business is making a loss.
How do you calculate interest?
[(Total repayment-Borrowed amount)/Borrowed amount]
x100
How do you calculate break even level output?
Fixed costs/(Selling price-Variable cost per unit)
How do you calculate margin of safety?
Margin of safety=Number of sales- Break even level of output
Why is cash important to a business?
-To pay suppliers, overheads and employees
-To prevent business failure(insolvency)
What is the differnece between cash and profit?
-Cash is the amount of money the business has availiable to pay for their day to day expenses.
-Profit is the difference between revenue and total costs.
How do you calculate cash inflow?
Cash Inflow=Net Cashflow-Cash outflow
How do you calculate cash outflow?
Cash Outflow=Net Cashflow-Cash Inflow
