Business Flashcards
PED
measures the sensitivity of demand to a change in price
%change in quantity demanded/ %change in price
YED
Measures the sensitivity of demand to a change in income
%change in quantity demanded/% change in income
sales forecasting
predicting future sales revenue, based on e.g. historical sales data, analysis of market surveys and trends
times-series analysis
Statistical methods to analyse and forecast sales. An example of time series analysis is the calculation of a 3 point moving average.
The Delphi method
The Delphi method is a sales forecasting technique were multiple rounds of questionnaires are sent to a panel of experts (who do not know each others identity) who work towards a common opinion about future sales
current liabilities
money owed by the business that will be paid within a year. For example, trade payable’s (suppliers) and overdraft.
Non-current liabilities
Money owed which is repaid over more than a year. For example, a bank loan, a mortgage.
current assets
Assets that are cash (bank account) or can be turned into cash within a year. For example, stock, trade receivables (money owed by customers who have bought on credit)
Non-current assets
Assets expected to be retained in the business for more than a year/long term. They are used to produced the output of the business e.g. machinery, vehicles, computers
Normal goods
as real incomes increase, the demand for normal goods will also increase positive income elasticity that is less than 1 (positive)
Inferior goods
Demand decreases as incomes increase i.e. as people get better off they buy less of these products and vice versa because consumers switch to better alternatives and substitutes products become affordable
luxury goods
Demand increases as incomes increase and vice versa. they have a positive income elasticity of more than positive 1
Budget
A budget is a financial plan for the future. Budgets can be for incomes, expenditure and profit
Budget variance
the difference between the actual outcome and the predicted outcome
Variance analysis
Variance analysis is checking actual outcomes against the predicted outcomes
Favourable analysis
When the actual figure will lead to more overall profit being made than was budgeted. This could either be that actual costs were lower than budgeted or actual revenue was higher than budgeted.
Adverse analysis
When the actual figure will lead to less overall profit being made than was budgeted. This could either be that actual costs were higher than budgeted or actual revenue was lower than budgeted.
Net assets
The value of a company’s assets once the value of its liabilities has been deducted.
non current assets+current assets - current liabilities - non current liabilities
