3.5 decision making to improve financial performance.

Question 1

5 financial objectives

Answer 1

revenue, cost, profit, cash flow, investment.

Question 2

2 internal influences on financial objectives

Answer 2

performance, mission

Question 3

2 external influences on financial objectives

Answer 3

economy. market.

Question 4

define budget

Answer 4

is the businesses spending plan

Question 5

favourable variance

Answer 5

actual income more than the budget

Question 6

adverse variance

Answer 6

actual income less than budget

Question 7

define a payable

Answer 7

money required to be paid

Question 8

define receivable

Answer 8

money owed to a business

Question 9

benefit of breakeven analysis

Answer 9

determining when your business is going to make a profit

Question 10

drawback of breakeven analysis

Answer 10

assumes all stock is sold

Question 11

what is debt factoring

Answer 11

debt company buys your invoices your owed and they take 5-10% for example

Question 12

+ and - of debt factoring

Answer 12

instantly receive what you are owed, don’t receive all of it.

Question 13

what is overdraft

Answer 13

lets you use more money than you have in your bank

Question 14

+ and - of overdraft

Answer 14

gives instant access to more funds. have to pay interest on money

Question 15

what is retained profits

Answer 15

reinvesting profits made into the business

Question 16

+ and - of retained profits

Answer 16

+ = don’t have to pay interest on
- = shareholders may ask for more in dividends

Question 17

what is share profit

Answer 17

money used from selling shares

Question 18

+ and - of share profit

Answer 18

+ = no repayment requirement
- = ownership dilution

Question 19

loans

Answer 19

borrowing money from banks

Question 20

+ and - of loans

Answer 20

+ = can get instant access
- = have to pay interest

Question 21

venture capital

Answer 21

private equity funding from venture capital firms

Question 22

+ and - of venture capital

Answer 22

+ = no repayment
- = gives away shares

Question 23

ways a business can improve cash flow

Answer 23

offer discount for early repayment. Increase pricing. send invoices out immediately. customer credit checks.

Question 24

ways a business can increase profit

Answer 24

budget. reduce costs. reduce waste. cost management.