Business growth and decline Flashcards

1
Q

Acquisition

A

When one business takes control of another business by purchasing a controlling interest in it

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2
Q

Bankruptcy

A

A declaration that a business or person is unable to pay his or her debts

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3
Q

Business life cycle

A

Refers to the stages of growth and development a business can experience

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4
Q

Cash flow

A

The money coming into the business in the form of cash receipts, and the money leaving the business as cash payments

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5
Q

Creditors

A

Those people or business who are owed money

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6
Q

Diversification(or conglomerate integration)

A

When a business acquires or merges with a business in a completely unrelated industry

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7
Q

Horizontal integration

A

When a business aquires or merges with anther business that makes and sells similar products

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8
Q

Insolvent

A

When a company is not able to pay its debts as and when they fall due

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9
Q

Involuntary cessation

A

When the owner is forced to cease trading by the creditors of the business

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10
Q

Liquidation

A

When an independent and suitably qualified person - the liquidator- is appointed to take control of the business with the intention of selling all the company’s assets in an orderly and fair way in order to pay the creditors

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11
Q

Merger

A

When the owners of two separate businesses agree to combine their resources and form a new organisation

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12
Q

Realisation

A

The process of converting the assets of a business into cash

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13
Q

Receivership

A

When a business has a receiver take charge of the affairs of the business. Unlike liquidation, the business may not nessarily be wound up

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14
Q

Vertical integration

A

When a business expands at different but related levels in the production and marketing of a product

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15
Q

Voluntary administration

A

When an independent administrator is appointed to operate the business in the hope of trading out of present financial problems

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16
Q

Voluntary cessation

A

When the owner ceases to operate the business of their own accord

17
Q

What is the correct order of the business life cycle phases?
A.Establishment, growth, prematurity, maturity
B.Establishment, growth, maturity, post-maturity
C.Establishment, growth, prematurity, post-maturity
D.Establishment, pregrowth, growth, prematurity, maturity

A

B.Establishment, growth, maturity, post-maturity

18
Q

Patrick Ng has started a new Korean restaurant. It is a partnership with his brother. What would be the financial management issues most likely to be faced by this business in its establishment phase?
A.Constantly increasing profits and cash-flow
B.High fixed costs and low cash-flow
C.Increasing profitability and variable costs
D.Limited liability and increasing profitability

A

Could be B

19
Q

To what type of business does the term ‘bankruptcy’ apply?
A.Private company
B.Government business enterprise
C.Partnership
D.Public company

A

C. Partnership

20
Q

What does the term ‘insolvency’ mean?
A.Lack of profitability
B.Too much debt owed by the business
C.Inability to repay debts
D.Poor sales revenue

A

C. Inability to repay debts

21
Q

Which of the following characteristics best describes the establishment stage of a business.
A.Low costs, low sales, little, profit
B.High costs, little profits, low sales
C.Low sales, large market share, high profit levels
D.High sales, small market, large scale production

A

c or d obviously

22
Q

Complacency among management usually occurs in which stage of the business life cycle?
A.Establishment
B.Growth
C.Maturity
D.Post-maturity

A

D.Post-maturity

23
Q

In response to an increase on competition, management of the restaurant has decided to expand the business. They have opted for a horizontal integration strategy. What is meant by this strategy?
A.The business merges with a totally unrelated business
B.The business creates a supply chain with a supplier
C.The business merges marketing and operations functions.
D.The business merges with another business making a similar product

A

D.The business merges with another business making a similar product

24
Q

In a sole trader or partnership, what is the process of converting the assets of a business into cash known as?
A. Realisation
B.Bankruptcy
C.Liquidation
D.Voluntary admininistration

A

C.Liquidation

24
Q

Which of the following best describes a takeover?
A.When one business buys a controlling interest in another
B.When a business takes over the accounting function of another
C.When overseas business invests heavily in a local operation
D.When two or more businesses agree to combine to form a single business

A

A.When one business buys a controlling interest in another

25
Q

An independent administrator is appoiinted to operate a company in the hope of trading them out of their present financial problems. What is this know as?
A.Bankruptcy
B.Liquidation
C.Realisation
D.Voluntary administration

A

D.Voluntary administration