Essentials Flashcards

(34 cards)

1
Q

Whats an index number

A

particular year given a base year value of 100 which then is compared to with other years as a %

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2
Q

Gross Profit

A

Rev-COGS

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3
Q

NP

A

Rev-All costs OR GP-other expenses

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4
Q

Working Capital

A

Current assets - current liabilities (looks at if a business can pay its short-term debts)

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5
Q

Net Assets

A

(all assets)-(all liabilities)

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6
Q

Total Shareholders Capital

A

share capital+retained profits

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7
Q

Capital Employed

A

Total shareholder capital + long term liabilities

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8
Q

Depreciation using the straight line method (annual)

A

Original cost of fixed asset- residual value / useful life. E.g cost 10k, lasts 2yrs, will be worth 2k: 10k - 2k = 8k 8k/2 = 4k pr year

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9
Q

GPM

A

GP/REV X 100

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10
Q

NPM

A

NP/REV X 100

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11
Q

ROCE (RETURN ON CAPITAL EMPLOYED)

A

NP/CEX100

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12
Q

Current Ratio

A

Current assets / current liabilities : IDEAL is 1.5:1 or 2:1 meaning it can pay off debts

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13
Q

Acid Test Ratio

A

Current assets - stock / current liabilties: Ideal 1:1

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14
Q

Gearing Ratio

A

LTL / CE X 100 = tells us how much debt compared to assets from things like bank loans. 50% + is high 25-50% is ideal

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15
Q

What are the five non-financial performance indicators (CEMPE)

A

Customer attitude surveys, employee attitude surveys, market share, productivity & environmental record

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16
Q

Mission statement

A

Purpose of the business for all internal and external stakeholders, written in a persuasive manner e.g exist to rid all humans of pain and disease

17
Q

Vision statement

A

outlines the business long-term strategic goal for the distant future

18
Q

Corporate aim

A

what the business wants to achieve in the long-term e.g 5yrs

19
Q

Objective

A

Medium term goal, how to achieve aim (SMART)

20
Q

Strategy

A

Step by step plan on how to achieve the objective

21
Q

Evaluate the effectivness of these statements to a business

22
Q

Corporate strategy

A

The big picture plan that affects the whole organization

23
Q

Strategic Direction

A

A course of action that helps achieve objectives e.g to enter the chinese market if there objective is to gain more market share in chinese markets

24
Q

Divisional Strategy

A

Plans for a specific part of an organisation e.g more marketing on apple watch

25
Functional Strategy
The Plans of every branch of the business to reach deparmental and therefore reach overall corporate objectives e.g marketing
26
Difference between strategy and tactic
Strategy: broad direction to achieving objectives, tactic = more specific short-term actions taken to help the strategy
27
Corporate Plan
Sets out the future strategies towards how to acheive a businesses aims, the plan is converted to specific objectives and strategies for each functional area.
28
Porters 5 forces (TP INTO THE POWER STATION)
Strengths and weaknesses of a business in relation to its external environment: 1 Threat of entry, Power of buyers, Intensity of competitve rivalry, Threat of subsitutes, Power of suppliers.
29
Ansoffs matrix
30
Rationalisation
Reorganising a business to increase productivity & efficency e.g cutting costs or expanding. Can be caused by changes in demand, economy, aims and objectives or competitors.
31
Strategic Descision Making
Long-term descisions made by (senior managers) to fulfill aims and objectives e.g market leader, corporate plan made around this.
32
Tactical Descision Making
Medium term, made by middle management to implement strategic descision into departments e.g marketing (departmental plans are devised around this)
33
Operational Descision Making
Short term day to day by lower management to ensure business runs smoothly e.g creating rotas, in line with businesses overall aims and objectives
34
ARR
averedge annual profits = net cash flow added / yrs. Then that divided by inital investment x 100.