Buisness Flashcards by Ibrew 456

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

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What are the 3 main recruitment documents

Job description
Person specification
Contract of employment

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What are 2 types of recruitment

Internal and external

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What are 6 methods of selection

Testing 
Curriculum vitae (cv)
Presentation 
Application letter
Interview 
Application form

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What are 4 main obligations expected from all parties

Honesty
Objectivity
Fairness
Confidentiality

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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

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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

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What are some signs of business success

Increasing profit
Expansion
Good customer reviews
Word of mouth recognition

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What are some signs of business failure

Loss of profit
Poor cash flow
Loss of customers
Bad customer reviews

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What are ways in which a business can grow organically

Reinvest it’s profits
Expand its product range
Increase sales activity

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What are two types of finance

Internal and external

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What are 2 types of growth

Internal (organic) and external

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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

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What are 3 types of integration

Horizontal
Vertical
Lateral

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What are some internal sources of finance

Debt collection 
Sale of fixed assets 
Sale of inventory 
Retained profits
Owner’s investment

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What are some external sources of finance

Government grants
Trade credit 
Mortgage 
Hire purchase 
Leasing 
Share issue 
additional partners 
Bank loan/overdraft

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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

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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

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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