Essentials Flashcards
(34 cards)
Whats an index number
particular year given a base year value of 100 which then is compared to with other years as a %
Gross Profit
Rev-COGS
NP
Rev-All costs OR GP-other expenses
Working Capital
Current assets - current liabilities (looks at if a business can pay its short-term debts)
Net Assets
(all assets)-(all liabilities)
Total Shareholders Capital
share capital+retained profits
Capital Employed
Total shareholder capital + long term liabilities
Depreciation using the straight line method (annual)
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
GPM
GP/REV X 100
NPM
NP/REV X 100
ROCE (RETURN ON CAPITAL EMPLOYED)
NP/CEX100
Current Ratio
Current assets / current liabilities : IDEAL is 1.5:1 or 2:1 meaning it can pay off debts
Acid Test Ratio
Current assets - stock / current liabilties: Ideal 1:1
Gearing Ratio
LTL / CE X 100 = tells us how much debt compared to assets from things like bank loans. 50% + is high 25-50% is ideal
What are the five non-financial performance indicators (CEMPE)
Customer attitude surveys, employee attitude surveys, market share, productivity & environmental record
Mission statement
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
Vision statement
outlines the business long-term strategic goal for the distant future
Corporate aim
what the business wants to achieve in the long-term e.g 5yrs
Objective
Medium term goal, how to achieve aim (SMART)
Strategy
Step by step plan on how to achieve the objective
Evaluate the effectivness of these statements to a business
Corporate strategy
The big picture plan that affects the whole organization
Strategic Direction
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
Divisional Strategy
Plans for a specific part of an organisation e.g more marketing on apple watch