3.5 Flashcards
Financial statement
Written records that convey the bus activities and the financial performance of a company
profit and loss statement is
a financial document showing the company revenue/income over the year and their costs and expenditure
why are P+L accounts useful for a bus
-legal requirement
-sums up the performance of a bus to its stakeholder
-investors/lenders need to see one before making deals
-it can help forecast future profits and help planning
stakeholders interest in P&L account
shareholders- want to know the final profit figure that the dividends will be paid out
investors-want to know the profitability of the bus. Worth investing or risk?
Employees and managers-may wish too know the expense of the bus
the balance sheet
-shows the worth of a bus
-shows assets and liabilities and how it is financed
-a snap shot
-shows sources of funds and uses of funds
-plc and ltd have to publish them
Capital employed is
Available finance for a business internally and externally
measure of the value of assets minus current liabilities. It must equal net assets
non current assets
-long term (fixed)
-intangible assets e.g. patents
-tangible assets e.g.property
current assets
-short term
-inventory
-trade and other receivables
-cash
non current liabilities
-long term
-borrowings
-retirement benefit obligations
-provision for liabilities (money set aside for the future)
-other non current liabilities (for repairs etc)§
Current liabilities
-short term
-borrowings (short term loans)
-current tax liabilities (corporate tax)
-provision for liabilities (to pay borrowings, tax etc)
uses of balance sheet
-evaluate performance of bus
-evaluate potential of a bus to an investor
-summary valuations of a bus
limitations of balance sheet
-value of assets sated may not be the same as the amount they will sell for
-intangible may include goodwill which is hard to put a value on
-is static snapshot of one day in the bus and the next day may change
stakeholder interest
-gov will use financial info to calc tax
-stakeholders may analyse accounts and decide whether their investment capital is being used efficiently
-director and senior managers use to assist medium to long term planning
-dreditors determine ability to pay bills
-potentially investors decide if its a gapped investment
ratio analysis
a method of quantifying a components liquidity, operational efficiency, and profitability to evaluate it’s performance over time and relative to its peers
current ratio calc
current assets / current liabilities
-this is how much liquid cash a business has
acid test ratio calc
current assets - stock / current liabilities
-this is how much liquid cash a business has excluding their stock
gearing ratio calc
no current liabilities / capital employed x100
-lower the better
-higher gearing = higher interest payment
-effects value of dividends or abilities to borrow more money
-non-current is long term
ROCE calc
(return on capital investment)
operating profit / capital employed x100
-the higher the better
-the profit in relation to how much money has been put into the bus
-how hard the bus made the money invested work
Human Resources
-HR is the division of a business that is charged with finding, screening, recruitment, training job applicants, and administering employee benefit programs
objectives and employees
if a bus wishes to achieve their objectives it is important that the workers:
-know the objectives
-agree with these aims
-work towards these objectives
what can happen to a bus if workers don’t know or don’t agree with objectives
no focus
progress slow
stragetic achievement suffers
projects don’t get delivered
operational performance declines
no coordinations
productivity decreases (by up to 25%)
employee contributions
Training and skills-a better trained workforce is generally more motivated more flexible and therefore more productive
Empowerment- allowing workers to contribute ideas and allowing them to make some decisions will increase morale
Leadership- the style of leadership must be appropriate to the bus circumstances
workforce morale
-Is a good indicator of how good employees contributions are likely to be
-there are a number of ways to measure morale:
surveys
appraisals
waste level
reject rates
consumer complaints
industrial relations record
reasons for poor motivation
-employees feel the job or workplace is not what they expected
-mismatch between job and person
-too little coaching and feedback
-too few growth and advancement opportunities
-employee feel devalued and unrecognised
-employees feel stressed from overwork and have little work/life balance
-loss of trust and confidence in senior leaders
ways of calculating poor workforce morale
labour productivity
labour turnover
absenteeism rate
labour productivity
output per time period / average number of employees x100
-output per workers measure efficiency
-can be improved by kaizen, TQM, lean production
Absenteeism rate
-measures the proportion of the total workforce who are absent over a particular time period
number of working days los to absence / total number of working days available x100
understanding absenteeism rate
-can show if there Is low staff morale or job satisfaction
-caused by: poor management, stress from overload or under-load, lack of recognition, poor working conditions
-could coast the business in terms of lost orders and poor customer relations
-can be improved by: job rotation, incentive scheme, job enlargement
depends on job industry e.g. construction employee may have a lot of accidents
labour turnover
number of employees leaving / av number of employees x100
-tracks how quickly staff in the workplace change
-high labour turnover indicates:
poor staff morale
-possible problems with recruitment problems
understanding labour turnover
-measure of performance
-some department may naturally have a higher turnover
-should be measures against historical figures in. bus
-higher labour turnover may be due to: poor recruitment, weak induction, lack of challenges in job, low pay rates
-if rising year of year management should see this as a red flag
how could a bus reduce absenteeism
-introducing mire flexible working practices
-ensuring that jobs are interesting and challenging
-improving working conditions and thus reducing dissatisfaction
-improving relations between employees and employer
-introducing attendance bonus as an incentive to attend regular
