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business > 3.5 > Flashcards

3.5 Flashcards

1
Q

what is a profit and loss statement

A

a financial document showing the company revenue or income over a year and their costs and expenditure

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2
Q

why are profit and loss statements useful

A

legal requirement
sums up performance for stakeholders
can be compared to previous years
investors and lenders need to see one before making deals
can help with forecasting

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3
Q

what is sales revenue

A

money obtained by the sale of goods or services

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4
Q

what is cost of goods

A

costs that are directly attributed to sales, vary depending on sales

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5
Q

how do you calculate gross profit

A

sales-cost of sales

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6
Q

what are expenses

A

other costs a business has that are not directly associated with sales or production

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7
Q

what is operating profit

A

profit after all expanses have been taken off

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8
Q

what is capital employed

A

measure of the value of assets minus current liabilities

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9
Q

what is a balance sheet

A

shows how much a business is worth, shows a businesses assets & liabilities

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10
Q

what are non current assets

A

long term assets of a business which are not expected to be sold within the next year of trading

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11
Q

what are intangible assets

A

copyright, trademarks, patents

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12
Q

what are tangible assets

A

property, equipment

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13
Q

what are current assets

A

short term assets of the business which are likely to be turned into cash within the next year of trading

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14
Q

what are inventories

A

stocks of raw materials

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15
Q

what are non current liabilities

A

debts which are not expected to be paid off within the next year of trading

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16
Q

give some examples of non current liabilities

A

pensions
money set aside for future expenses

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17
Q

what are current liabilities

A

debts which are expected to be paid within the next year of trading

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18
Q

give some examples of current liabilities

A

corporation tax
short term loans

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19
Q

what are the uses of a balance sheet

A

evaluate performance of the business
evaluate potential of a business to an investor
summary valuation of the business

20
Q

what are the limitations of a balance sheet

A

value of assets stated may not be the same as the amount they will sell for
intangible may not include other non monetary value

21
Q

why do the government have an interest in a businesses balance sheet

A

they will use the financial information to calculate the amount of tax that a company has to pay

22
Q

why do shareholders have an interest in a businesses balance sheet

A

analyse the accounts and decide whether their investment capital is being used effectively

23
Q

why do directors & senior managers have an interest in a businesses balance sheet

A

use accounts to assist their medium & long term planning

24
Q

what is the equation for current ratio

A

current assets/current liabilities

25
Q

what is the equation for the acid test ratio

A

current assets - stock/current liabilities

26
Q

what is the equation for gearing ratio

A

loan capital/capital employed X100

27
Q

what is the equation for ROCE

A

operating profit/capital employed X100

28
Q

what is operating profit

A

profit before interest & taxes

29
Q

what is the equation for capital employed

A

fixed assets + current assets - current liabilities

30
Q

what are the limitations of using ratio analysis

A

based on a snapshot of the business - markets are dynamic figures could quickly change
only as reliable as the information provided
needs to be compared against other figures
must be kept in context of the industry

31
Q

if a business wishes to achieve their objectives it is important that the workers:

A

know the objectives
agree with these aims
work towards objectives

32
Q

what could happen to organization whose employees do not work towards the businesses objectives

A

progress is slow
strategic achievement suffer
uncoordinated
projects don’t get delivered
operational performance declines
giving up productivity gain of up to 25%

33
Q

what are employee contributions

A

training & skills - a better trained workforce is generally more motivated, flexible & productive
empowerment - allowing workers to contribute ideas & allow decision making to increase moral
leadership - style of leadership must be appropriate to the business circumstances

34
Q

how can you measure workforce moral

A

surveys
appraisals
waste levels
reject rates
consumer complaints
industrial relations record

35
Q

what are the reasons for poor motivation

A

employees feel the job or workplace is not what they expected
there is mismatch between job & person
too little coaching & feedback
too few growth & advancement opportunities
feel devalued & unrecognized
feels stress from overwork & have bad work/life balance
loss of trust & confidence in senior leaders

36
Q

how can workforce morale be calculated

A

labor productivity
labor turnover
absenteeism rate

37
Q

what is the equation for labor productivity

A

output per time period/average number of employees

38
Q

how can labor productivity be improved

A

kaizen, TQM, lean production

39
Q

what is absenteeism rate

A

measures the proportion of the total workforce who are absent over a particular period of time

40
Q

what is the equation for absenteeism rate

A

number of working days lost/total number of working days available X100

41
Q

what causes high absenteeism rates

A

poor recruitment, weak induction, lack of challenge, low pay rates

42
Q

what is the equation for labor turnover

A

number of employees leaving/average number of employees X100

43
Q

what is low staff morale or job satisfaction caused by

A

poor management, stress, role overload or underload, lack of recognition, poor working conditions

44
Q

how could low staff morale and job satisfaction be improved

A

job enlargement, job rotation, incentive schemes

45
Q

how could a business reduce absenteeism

A

introducing more flexible working practices, ensuring jobs are interesting & challenging, improving working conditions & reducing dissatisfaction, improving relations between employers & employees
introducing attendance bonuses as an incentive to attend regularly

business (22 decks)

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