7.1 / 7.2 - Analysing strategic position of a business Flashcards
What is SWOT analysis?
A business can use a SWOT analysis to explore its internal strengths and weaknesses and the external opportunities and threats facing the business.
It is a grid containing Opportunities, weaknesses, threats, stregnths.
What is return on capital employed and how is it calculated?
The return on capital employed (ROCE) calculation allows a business to compare operating profit with the total capital employed by the business.
ROCE can be calculated using: (operating profit ÷ total capital employed) × 100
Capital employed can be calculated using: total equity + non-current liabilities.
What is current ratio and how is it calculated?
The current ratio calculation allows a business to explore its liquidity by comparing current assets with current liabilities.
Current ratio can be calculated using:
Current assets ÷ current liabilities
What is gearing and how is it calculated?
Gearing calculations can be used to calculate the proportion of long-term funding which comes from debt.
Gearing can be calculated:
(Non-current liabilities / capital employed) x 100
What are payable days and how are they calculated?
Payable days can be used to calculate the time taken for a business to pay the money that it owes.
Payable days can be calculated:
(Payables ÷ COGS) × 365
What are receivable days and how are they calculated?
Receivables days can be used to calculate the time taken for a business to collect the money that it is owed.
Receivables days can be calculated:
(Receivables ÷ revenue) × 365
