Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

business a level > 2.2 financial planning > Flashcards

2.2 financial planning Flashcards

1
Q

what is sales volume?

A
  • the amount of output sold in a particular time period
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is the formula for sales volume?

A

selling price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what is sales revenue?

A
  • the value of output sold in a particular time period
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what is the formula for sales revenue?

A

price X sales volume

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is a fixed cost?

A
  • costs which don’t change with the level of output
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what are variable costs?

A
  • costs which change directly with the changes to output
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what is a semi-variable costs?

A
  • a costs that consist of both fixed and variable element

- e.g labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what’s the formula for variable costs?

A
  • variable cost Pu X units produced
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what’s the formula for total costs?

A

variable costs + fixed costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what’s the formula for average costs?

A

output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what’s the formula for profit?

A

revenue - total costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what is capital expenditure?

A
  • money spent on long term assets such as buying a factory
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what is revenue expenditure/

A
  • money spent on buying day to day items such as raw materials
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what is a debtor?

A
  • owes the business money
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is a creditor?

A
  • owes 3rd parties money
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what does insolvent mean?

A
  • a business doesn’t have enough cash to pay costs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what’s the formula for net cash flow?

A

inflows - outflows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what’s the formula for closing balance?

A

opening balance + net cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

what is liquidity?

A
  • ease with which assets can be turned into cash
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what is capital?

A
  • the amount of money which has gone into the business
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what is sales forecasting?

A
  • projection of future sales revenue, often based on previous sales data
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

what is time series data?

A
  • a method that allows a business to predict future levels from past figures
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what is extrapolation?

A
  • forecasting future trends based on past data
24
Q

what are benefits of sales forecasting?

A
  • helps inform cash flow forecasting and accurate budgeting
  • enables them to predict appropriate staffing levels
  • helps understand demand
25
Q

what is the Delphi method?

A
  • involves getting a group of market experts to provide an opinion on the forecasting task
26
Q

what does breakeven mean?

A
  • where a business makes neither a profit or a loss
27
Q

what’s the formula for breakeven?

A
  • total costs = total revenue
28
Q

what are 3 ways to find breakeven?

A
  • calculate using a table of costs and output
  • interpreting charts
  • using a formula
29
Q

what is margin of safety?

A
  • the difference between the actual units of output and the breakeven output
30
Q

what’s the formula for margin of safety?

A

current output - breakeven output

31
Q

what does contribution do?

A
  • looks at the profit made on individual products

- used to calculate how many items need to be sold to make profit

32
Q

what is contribution?

A
  • the difference between the selling price and variable costs
33
Q

what’s the formula for contribution Pu?

A

selling price Pu- variable cost Pu

34
Q

what’s the formula for total contribution?

A

contribution Pu X number of units sold

35
Q

what’s the formula for breakeven output?

A

contribution

36
Q

what is a budget?

A
  • a quantitative economic plan prepared and agreed in advance
37
Q

what is budgetary control?

A
  • involves making future plans
38
Q

what is the purpose of budgeting?

A
  • control and monitoring
  • planning
  • communication
  • improves financial efficiency
  • improve motivation
39
Q

what is a revenue budget?

A
  • expected revenue and sales

- broken down into more detail (products, location)

40
Q

what is a cost/expenditure budget?

A
  • expected costs based on sales budget

- overheads and other fixed costs

41
Q

what is a profit budget?

A
  • of great interest to share holders

- based on combined sales and cost budget

42
Q

what are the 2 main approaches to budgeting?

A
  • historical budgeting

- zero based budgeting

43
Q

what is historical budgets?

A
  • uses last years figures as the basis for the budget
44
Q

why may historical budgeting be useful?

A
  • based on actual results
45
Q

why may historical budgets be bad?

A
  • circumstances may have changed

- doesn’t encourage efficiency

46
Q

what is a zero based budget?

A
  • budgets costs and revenue are set to zero

- budget is based on new proposals for sales and costs

47
Q

what are advantages to using a zero based budget?

A
  • potentially more realistic
48
Q

what are disadvantage of using zero based budgets?

A
  • time consuming

- more complicated

49
Q

what is a variance analysis?

A
  • when there is a difference between actual and budget figures
50
Q

what can variances be?

A
  • positive/favourable (better than expected)

- adverse/unfavourable (worse than expected)

51
Q

what is a favourable variance?

A
  • costs are lower than expected

- revenue is higher than expected

52
Q

what is an adverse variance?

A
  • costs are higher than expected

- revenue is lower than expected

53
Q

what are possible causes of favourable variances?

A
  • stronger market demand than expected
  • selling process increased higher than budget
  • cautious sales and cost assumptions
54
Q

what are possible causes of adverse variances?

A
  • unexpected events lead to unbudgeted costs
  • over spends
  • sales forecast prove over optimistic
  • market conditions
55
Q

what are problems and limitations of budgets?

A
  • are only as good as data being used
  • can lead to inflexible decision making
  • need to be changed as circumstances change
  • can add to demotivation if unrealistic

business a level (24 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions