Essentials

Question 1

Whats an index number

Answer 1

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

Question 2

Gross Profit

Answer 2

Rev-COGS

Question 3

NP

Answer 3

Rev-All costs OR GP-other expenses

Question 4

Working Capital

Answer 4

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

Question 5

Net Assets

Answer 5

(all assets)-(all liabilities)

Question 6

Total Shareholders Capital

Answer 6

share capital+retained profits

Question 7

Capital Employed

Answer 7

Total shareholder capital + long term liabilities

Question 8

Depreciation using the straight line method (annual)

Answer 8

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

Question 9

GPM

Answer 9

GP/REV X 100

Question 10

NPM

Answer 10

NP/REV X 100

Question 11

ROCE (RETURN ON CAPITAL EMPLOYED)

Answer 11

NP/CEX100

Question 12

Current Ratio

Answer 12

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

Question 13

Acid Test Ratio

Answer 13

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

Question 14

Gearing Ratio

Answer 14

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

Question 15

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

Answer 15

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

Question 16

Mission statement

Answer 16

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

Question 17

Vision statement

Answer 17

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

Question 18

Corporate aim

Answer 18

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

Question 19

Objective

Answer 19

Medium term goal, how to achieve aim (SMART)

Question 20

Strategy

Answer 20

Step by step plan on how to achieve the objective

Question 21

Evaluate the effectivness of these statements to a business

Answer 21

Question 22

Corporate strategy

Answer 22

The big picture plan that affects the whole organization

Question 23

Strategic Direction

Answer 23

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

Question 24

Divisional Strategy

Answer 24

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

Question 25

Functional Strategy

Answer 25

The Plans of every branch of the business to reach deparmental and therefore reach overall corporate objectives e.g marketing

Question 26

Difference between strategy and tactic

Answer 26

Strategy: broad direction to achieving objectives, tactic = more specific short-term actions taken to help the strategy

Question 27

Corporate Plan

Answer 27

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.

Question 28

Porters 5 forces (TP INTO THE POWER STATION)

Answer 28

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.

Question 29

Ansoffs matrix

Answer 29

Question 30

Rationalisation

Answer 30

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.

Question 31

Strategic Descision Making

Answer 31

Long-term descisions made by (senior managers) to fulfill aims and objectives e.g market leader, corporate plan made around this.

Question 32

Tactical Descision Making

Answer 32

Medium term, made by middle management to implement strategic descision into departments e.g marketing (departmental plans are devised around this)

Question 33

Operational Descision Making

Answer 33

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

Question 34

ARR

Answer 34

averedge annual profits = net cash flow added / yrs. Then that divided by inital investment x 100.