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A2 Business > Definitons > Flashcards

Definitons Flashcards

1
Q

Ansoff’s Matrix

A

An analytical tool that considers risk and the potential reward from strategic options.

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2
Q

Acid Test

A

Liquid Assets / Current Liabilities

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3
Q

Asset Turnover

A

Revenue / Net Assets

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4
Q

Average Rate of Return

A
  1. Net cash flow / N.O years = Average Annual Profit

2. (Annual profit / initial investment) x 100

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5
Q

Current Ratio

A

Current Assets / Current Liabilities, expressed as x:1

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6
Q

Dividend per Share

A

Total Dividends / Number issued, expressed in pence per share

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7
Q

Dividend Yield

A

(Ordinary Share Dividend (in pence) / Current Market Price) x 100

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8
Q

Gearing

A

(Non Current Liabilities / (Total equity + non current liabilities)) x 100

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9
Q

Gross Profit

A

Sales Revenue - Cost of sales

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10
Q

Inventory Turnover

A

Cost of Sales / Average inventory held

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11
Q

Market Share

A

(Sales of a Firm / Total Market Sales) x 100

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12
Q

Moving Averages (3 point moving average)

A

Add 1,2,3 divide by 3
Add 2,3,4 divide by 3
Add 3,4,5 deivide by 3
Continue until the last number is included in a set of 3

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13
Q

Net Assets

A

Non-Current Assets + Current Assets - Current Liabilities - Non current Liabilities

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14
Q

Net Current Assets/Liabilities

A

Current Assets - Current Liabilities.

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15
Q

Net Present Value

A
  • Net Cash flow Table
  • Multiply each years net cash flow by the discount factor year 0 is multiplies by 1
  • Add all the net values including the negative for year 0
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16
Q

Net Profit Margin

A

(Operating profit (net profit) / Sales Revenue) x 100

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17
Q

Payable Day’s

A

Payable x 365 / Cost of Goods Sold

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18
Q

Payback

A
  1. Net cash flow Table
  2. Cumulative to identify when investment is covered
  3. ÷ amount paid in last year by net cash flow same year
  4. Times figure in step 3 by 12 to get monthly.
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19
Q

Receivables

A

Receivables x 365 / Revenue (in days)

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20
Q

ROCE

A

Operating Profit / Total equity + Non Current Liabilities.

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21
Q

Working Capital

A

Current Assets - Current Liabilities

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22
Q

Asset Turnover Def

A

Measures how the assets of the business are being utilise to generate revenue.

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23
Q

Acid Test Def

A

A measure of a firm’s short term survival i.e its ability to meet short term debts and day to day expenses.

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24
Q

Average Rate of Return Def

A

An investment appraisal technique that calculates average profit as a percentage of the total cost of the initial investment.

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25
Q

Current Ratio Def

A

A measure of a firm’s liquidity and short term survival i.e its ability to meet short term debts and day to day expenses

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26
Q

Dividend per Share Def

A

The return paid to the shareholders for each unit of their investment.

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27
Q

Dividend Yield Def

A

Measures the return on a shareholder’s investment as a percentage of the current market price.

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28
Q

Float Time Def

A

The amount of extra time available to complete a non critical activity without delaying the project.

29
Q

Gearing Def

A

A measure of the proportion of a business’s capital that is funded through long term loans.

30
Q

Gross Profit Def

A

Profit after cost of sales has been deducted and before expenses.

31
Q

Inventory Turnover Def

A

Measures how efficiently a business replaces its stock in a year and hence whether stock is being used efficiently to generate sales.

32
Q

Moving Averages Def

A

A method of market analysis which shows whether a trend is significant by smoothing out fluctuations.

33
Q

Net Assets Def

A

The net worth of a business by the balancing of assets against liabilities.

34
Q

Net Current Assets/Liabilities Def

A

The difference between Current Assets and Current Liabilities.

35
Q

Net Present Value Def

A

An investment appraisal technique that calculates the total return on an investment taking into account the time value of money.

36
Q

Net Profit Margin Def

A

A measure of Profitability that looks at operating profit as a percentage of sales revenue.

37
Q

Payable Day’s Def

A

Measures how long on average it takes a business to pay its suppliers it has purchased on credit.

38
Q

Payback Def

A

An investment appraisal technique that measures how long it would take to pay back the cost of the initial investment.

39
Q

Receivable Days Def

A

A measure of how long it takes a customer to pay for credit purchases.

40
Q

ROCE Def

A

A measure of how efficiently a business is using its capital employed to generate profit.

41
Q

Working Capital Def

A

A measure of a firms liquidity / ability to meet day to day expenses.

42
Q

Centralisation

A

The responsibility of decision making it made by the few individuals at the top of the hierarchy.

43
Q

Corporate Objective

A

Long term goals of a business which determines its guiding principles.

44
Q

Cost Centre

A

A financial strategy where costs are attributed to different sections of the business.

45
Q

CPA

A

A process which decides which tasks can be completed simultaneously and the order in which they need to be completed.

46
Q

Decentralisation

A

The responsibility of decision making is delegated to middle managers in the hierarchy.

47
Q

Delayering

A

A cost saving strategy that removes levels in the hierarchy.

48
Q

Differentiation (Porter)

A

The ability to provide a product or service that stands out from the competition.

49
Q

Diseconomies of Scale

A

Increasing the scale of production that leads to increasing unit costs.

50
Q

Diversification

A

Where companies aim to provide :
NEW PRODUCT
NEW MARKET

51
Q

Dividend

A

A share of profit paid to the shareholder as a reward for their investment.

52
Q

Economies of Scale

A

Increasing the scale of production that leads to falling unit costs.

53
Q

Functional Objectives

A

Medium to Long term goals of departments e.g Marketing/Finance which help achieve the corporate objective.

54
Q

Hard HR

A

Employees are treated as a resource that need to be managed to control costs and output.

55
Q

Investment Appraisal

A

Techniques that analyse the predicted financial outcomes of potential investments.

56
Q

J-I-T

A

Ordering materials just before they are needed. Lower storage / wastage costs. Suppliers are nearby and are flexibility / reliability. Late delivery could be costly.

57
Q

Kaizen

A

Continuous improvement - employees make suggestions for small-scale improvements. Provides motivation for employees given power / opportunity to increase efficiency

58
Q

Low Cost Strategy (Porter)

A

When businesses provide goods/services at lower costs than their competitors.

59
Q

Market Development (Porter)

A

Where the businesses puts existing products into new markets.

60
Q

Product Development (Porter)

A

Where the businesses puts new products in existing markets.

61
Q

Market Penetration (Porter)

A

Where the businesses puts existing products into existing markets.

62
Q

Operational Objectives

A

Targets of which help the business to produce goods/services in the most effective way.

63
Q

Porters Generic Strategy

A

Marketing Strategies that a business can adopt in order to achieve a comparative advantage.

64
Q

Soft HR

A

Employees are regarded as an asset and can help the business achieve its long term targets.

65
Q

TQM

A

An approach where each employee in the chain puts quality first and treats the next link like an external customer.

66
Q

Lean Production

A

Working practices that focus on removing waste, whilst maintaining or improving quality.

67
Q

Stakeholders

A

A group or individual that has a vested interest in a firm

68
Q

Operation Management

A

The attempt to ensure that the right goods/services are produced at the right time at the right cost at the right quality.

A2 Business (10 decks)

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