Decisions exam prep

Question 1

Financing

Answer 1

Act of obtaining or furnishing money or capital for a purchase or enterprise.

Question 2

Equity capital

Answer 2

The contribution that the owners make to the purchase of a business or its growth.

Question 3

Debt capital

Answer 3

Borrowed funds.

Question 4

P =

Answer 4

Principle, amount borrowed

Question 5

I =

Answer 5

Interest, cost of borrowing

Question 6

PPMT =

Answer 6

Principal Payment

Question 7

Mortgage

Answer 7

A registered document that specifies property pledged as security for a loan. All mortgages are loans, but not all loans are mortgages

Question 8

Mortgagee

Answer 8

Lender

Question 9

Mortgagor

Answer 9

Borrower

Question 10

IPMT =

Answer 10

Interest Payment

Question 11

Table loan

Answer 11

Land, buildings, livestock. Regular payments are the same each time (unless interest rate changes). Interest charged only on outstanding principal (start with money towards interest, then money towards principal). Total interest paid depends on frequency of payments, the longer the term, the smaller the payments/time.

Question 12

Term loan/reducing loan

Answer 12

Principal repaid in equal amounts through life of loan. Interest calculated on amount outstanding.

Question 13

Flat loan/interest only

Answer 13

Often used for second mortgage. Second mortgage is needed if first is not enough to obtain the asset. Can only be used in the short to medium term to have more disposable income, can be changed at the end to a table loan, can be paid in full at the end.

Question 14

Table loan equation

Answer 14

A = P x ((i(1+i)^n))/((1+i)^n-1))
A = payment per period
P = principal sum borrow
i = periodic interest rate (annual rate/no of payment periods)
n = no of period payments

Question 15

Credit Worthiness (5 C’s)

Answer 15

Character (record and appearance), capacity (ability to repay), collateral (assets as security), capital (borrowers stake/equity in business), conditions (external and internal)

Question 16

Low cost strategy

Answer 16

Employ young people at low cost. Issues - work performance, staff turnover, breakages, drugs, absenteeism, motivation

Question 17

Training focused strategy

Answer 17

Develop a reputation for providing high quality training for staff. Issues - attract high quality staff but staff turnover is a problem as they move onto better positions

Question 18

High commitment strategy

Answer 18

Long-term strategy to build employee commitment - grow with the business

Question 19

Employee resourcing

Answer 19

Employee a ‘suitable’ person. Once employed it is difficult to fire them if they are unsuitable. It involves two sub-processes - recruitment and selection

Question 20

Recruitment

Answer 20

Requires the manager to plan and acquire staff. HR planning, job analysis and job description, selection and orientation

Question 21

External forces that influence human resource management

Answer 21

Legal, customers, union/employees, labour market, political, labour market changes, society, globalisation, economic, industry, tech, shareholders

Question 22

Recruitment

Answer 22

Requires the manager to plan and acquire staff. HR planning, job analysis and job description, selection and orientation. identify a job vacancy, define requirements for performance, gather applicants

Question 23

Job description

Answer 23

Internal document that contains the essential job requirements, duties, responsibilities, and skills required. More detailed descriptions include title, essential functions, reporting relationships, authority level, tasks, duties, crucial features

Question 24

Human Rights Act

Answer 24

prohibits discrimination between employees or potential employees

Question 25

Private Act

Answer 25

applications cant request info that isn’t used for employee selection

Question 26

Fair Trading Act

Answer 26

the enterprise cannot misrepresent itself through its job advertising

Question 27

Selection

Answer 27

Compare and assess applicant attributes in relation to job requirements, provide info to applicants so they can make informed decisions, notify applicants of employment status

Question 28

Physical inventory

Answer 28

Stock (livestock, plants), grain, inputs (chemical, fertiliser)

Question 29

Capital inventory

Answer 29

Machinery, infrastructure

Question 30

Financial inventory

Answer 30

Bank accounts (credit, debit), cash, debtors, creditors

Question 31

Livestock schedules

Answer 31

Detailed sources and uses. Information used in GM, balance sheet, cashbook

Question 32

Gross margin =

Answer 32

Total revenue - total variable costs. Allows for comparison on a per unit basis