All Flashcards
How to work out total costs
Fixed costs + variable costs
How to work out profit or loss
Total revenue - total costs
What are the types of finance
Debenture Venture capitalist (money provided to start up) Retained profit Overdraft Trade credit (difficult for sole traders) Leasing Bank loan Grants Ordinary share capital
How do you work out the net cash flow
Inflow - outflow
Recipts - payments
What is the closing balance in a cash flow forecast
Net cash flow + opening balance
What is the opening balance in a cash flow
Same as the closing balance of the month before
What happens if a business has unlimited liability
Owner responsible for all debts
Must pay off with money and if can’t they have to sell personal things like car
Higher risk
Advantages and disadvantages of being a sole trader
Control of business, cheap and easy, keep all profit, business affairs private
Unlimited liability, difficult for finance, problem if sole trader died
How do you set up as a limited company
Register with companies house and is issued a certificate of incorporation. Needs a memoradum of association and articles of association
What is a limited company
A business that is owned by its share holders, run by directors and whose liability is limited
What records need to be kept
Vat - tax on customers
Cororporation tax - when a business makes profit it has to pay this
Income tax
What is on the job training
Training existing employees as they work by putting them with experienced workers e.g teacher
What is off the job training
Worker trained away from workplace e,g colleges
Often expensive for smaller businesses
Ways to soothe a dissatisfied customer
Discounts Stay calm Advise Listen Make sure they are comfortable Act polite Offer exchange Make number one priority Apologise Know who to refer them to
What is the rule of supply and demand
When Price increases quantity of demand falls
When price decreases quantity of demand rises
When will shortage occur
If the demand for a product is greater than supply
When will a surplus occur
If supply for a product is greater than demand
What does Quantity Demanded > Quantity Supplied do
Make price rise
What does Quantity supplied > Quanity Demanded do
Make price fall
What is absorbing the cost
Unable to change the price so your only option is to absorb the cost which lowers profit margins
What can smaller businesses do
Change the product cost but commodities markets can’t
If interest rate goes up what happens to consumer spending
It goes down because borrowing is more expensive and saving goes up as the interest is better
If the interest rate goes up what happens
Consumer spending goes up and saving goes down
What does SPICED stand for
Strong point imports cheaper exports dearer
