Buisness Flashcards
What is a typical recruitment procedure
Draw up a job description
Design a person specification
Advertise the post and invite applicants
Sort applicants and draw up a shortlist
Interviews applicants who meet the criteria stated in the ad
Select successful applicant and offer the job
Complete the contract of employment
What are the 3 main recruitment documents
Job description
Person specification
Contract of employment
What are 2 types of recruitment
Internal and external
What are 6 methods of selection
Testing Curriculum vitae (cv) Presentation Application letter Interview Application form
What are 4 main obligations expected from all parties
Honesty
Objectivity
Fairness
Confidentiality
What is the importance of having motivated employees
If employees are motivated they will have increased overall productivity which leads to improved profitability of the business
What is the importance of having well-trained employees
New employees will be properly inducted into the business
Employees will have updated skills and will be equipped to cope with constantly changing technology
Employees will become more competitive and make more money
What are some signs of business success
Increasing profit
Expansion
Good customer reviews
Word of mouth recognition
What are some signs of business failure
Loss of profit
Poor cash flow
Loss of customers
Bad customer reviews
What are ways in which a business can grow organically
Reinvest it’s profits
Expand its product range
Increase sales activity
What are two types of finance
Internal and external
What are 2 types of growth
Internal (organic) and external
What are ways in which a business can grow externally
Takeover-when one business buys control of another business
Merger-when two businesses voluntarily join two form one larger business
Franchising-when a business gives rights for a person or people to use their idea to create another shop somewhere else
Integration-this is when 2 businesses become one achieved through mergers and takeovers
What are 3 types of integration
Horizontal
Vertical
Lateral
What are some internal sources of finance
Debt collection Sale of fixed assets Sale of inventory Retained profits Owner’s investment
What are some external sources of finance
Government grants Trade credit Mortgage Hire purchase Leasing Share issue additional partners Bank loan/overdraft
What are 3 advantages of internal sources of finance
No interest
The affairs of the business are kept private
Does not have to be repaid
What are 3 advantages of external sources of finance
Larger sums of money are available
The money is usually available more quickly
The borrower has the use of the asset while paying for it
What is a disadvantage of internal sources of finance
There may not be enough money available
What are disadvantages of external sources of finance
It is more expensive as interest has to be paid
The lender requires security in case of non-payment
What is the purpose of a cash flow
Forward planning
It shows when finance is required
It shows when loans can be repaid
It sets targets for the business
What are some consequences of incorrect forecasting
Inventory levels may be inaccurate
Bank loans may be required
The business may have to close
What is the cost of sales and inventory equation
Opining inventory + purchases - closing inventory
What is gross profit/loss
The difference between the money the business makes from the sales rev and the cost of sales
What is expenses
Examples are rent, rates, electricity, telephone, salaries and heating
What is net profit/loss
It’s the true profit of the business for that year and takes into consideration all the expenses which have to be paid by the business
What are non-current assets
Assets which are more permanent eg machinery
What are non-current liabilities
Liabilities that are borrowed for a long time eg bank loans
What are current assets
Assets which can be quickly exchanged for cash eg inventory
What are current liabilities
Liabilities which need to be paid immediately eg trade payables
What is the gross profit equation
Sales rev - cost of sales
What is the net profit equation
Gross profit- expenses
What does a statement of financial Position record
The businesses Assets and liabilities
The owners capital
The owners drawings
The net profit from the income Statement
What is the gross profit percentage equation
Gross profit/sales rev x 100
What is the net profit percentage equation
Net profit/sales rev x 100
What is the roce equation
Net profit/capital employed x 100
What does roce mean
Return on capital employed
What is the working capital ratio equation
Current assets/current liabilities
What are fixed costs
Costs that aren’t affected by the quantity of goods produced or sold or by the scale of services rendered
What are variable costs
Costs that are affected by the quantity of goods produced or sold or by the scale of services rendered
What is the break even point
its where its total costs equal the total of its sales revenue. its the minimum point at which the business can survive.
What is the break even equation
total fixed costs/selling price per unit - variable price per unit.
What is the significance of the break even point
it can show
the amount of goods which must be sold in order to make a profit
the level of costs which the business can bear
the price which needs to be charged for goods
how changes in the price would affect the business’s profits.
What is the gross profit percentage
The level of gross profit which a business has made on the sales rev
What is the net profit percentage
The amount of net profit which is made on sales rev
What is roce
The profitability of the business by comparing the net profit with the capital invested by the owners
What is the working capital ratio
The relationship between a businesses current assets and current liabilities
