2.2 Financial planning + 2.3 managing finance Flashcards
1
Q
pros of sales forecasting
A
- better decision making
- gives aim to work for (motivate)
2
Q
Cons of sales forecasting
A
- limited accuracy (previous data)
- can be influenced by opinion
3
Q
Uses of break even analysis
A
- decide whether business idea is viable/profitable
- assess effects of costing and pricing decisions
4
Q
limitations of break-even analysis
A
- presumes the business will sell all output
- Assumes Costs remain constant
5
Q
Pros of Budgets
A
- allocate resources effectively
-motivate staff to meet objectives
6
Q
Cons of budgets
A
- past trends can be our indicator
- external bodies can effect decisions eg Gov legislation
7
Q
Pro of Zero based budgeting
A
- efficient at minimising unnecessary costs
8
Q
Con of Zero-based budgeting
A
- time consuming
- barrier to decision making
9
Q
pros of using a income statement
A
identifies profitability + flaws
compare against competitors
10
Q
Cons of using income statement
A
- no insight into operational issues
- misleading with one time events
11
Q
ways to increase revenue
A
- increase prices
- create awareness through marketing
- add value to product
12
Q
Ways to decrease costs
A
- reduce production costs
- improve efficiency
- eliminate unprofitable products
13
Q
what is the difference between Cash and profit
A
business cannot be profitable unless it effectively manages cash flow.
cash is day to day (sometimes before revenue comes in)
14
Q
pros of using balance sheet
A
identifies potential issues
strategic planning
15
Q
Cons of using a Balance Sheet
A
- very specific point in time (not a yearly figure)
- misrepresent true value of assets
16
Q
best ways to Improve Liquidity
A
- Sell off excess stock
- Sell Fixed assets
- Long term loans (2-3 years)
17
Q
What are causes of cash flow problems
A
- allowing too much trade credit
- inaccurate management
- unforeseen costs
