Business kt test 26th

Question 1

capital employed formula

Answer 1

shareholder funds + non-current liabilities

Question 2

working capital formula

Answer 2

current assets - current liabilities

Question 3

depreciation formula

Answer 3

original costs - residual value / useful life of assets

Question 4

ROCE formula

Answer 4

Net profit / capital employed x100

Question 5

Current ratio formula

Answer 5

current assets/ current liabilities

Question 6

Acid test ratio

Answer 6

current assets - stock /current liabilities

Question 7

Gearing ratio formula

Answer 7

ncl/capital employed x 100

Question 8

vision statement

Answer 8

A description of what a business sets out to achieve in the medium to long term. It should provide a clear guide to senior management of the future direction of the business.

Question 9

Objectives

Answer 9

Targets the business will set out to achieve its aims

Question 10

SMART objectives

Answer 10

objectives that are specific, measurable, achievable, realistic and time based. They are quantifiable, therefore can be used more easily to monitor progress

Question 11

Mission statement

Answer 11

A broad statement of its aims and values. It will guide the everyday operations and decision-making of the business.

Question 12

strategy

Answer 12

A medium to long term plan

Question 13

corporate strategy

Answer 13

A medium to long term plan that affects the entire business. Decided upon by senior management. Decisions on how to achieve a businesses mission/vision/aims/objectives

Question 14

Divisional strategy

Answer 14

Plans that relate to divisions in a business e.g.a business may be divided by products. It is guided by the corporate strategy

Question 15

Functional strategy

Answer 15

Plans that relate to a single functional operation such as:production, marketing or HRM and the activities involved within each of these functions. It is guided by the corporate strategy

Question 16

Tactics

Answer 16

short to medium term decisions that aim to implement strategic decisions. They are usually carried out by middle management and are less complex and more flexible than strategic decisions. For example, an advertising campaign

Question 17

SWOT analysis

Answer 17

A tool to identify and analyse the internal strengths and weaknesses of an organisation, as well as the external opportunities and threats created by the business and economic environment.

Question 18

Porters five forces

Answer 18

A model that suggest there are five main forces that determine the behaviour of businesses and the likely levels of probability. They are:
-buyer power
-supplier power
-threat of substitutes
-threat of new entry
-competitive rivalry (threat from competitors)

Question 19

Ansoff’s matrix

Answer 19

A strategic tool used by businesses to achieve growth. It suggests the level of risk associated with each strategy considers whether to target existing customers or new customers and if existing or new products should be developed. The 4 strategies are:
-market penetration
-Product development
-market development
-diversification