finance topic three - questions and how to calculate shit

Question 1

how to calc total liabilities

Answer 1

creditors + short term loans + long term loans

Question 2

how to calc working capital

Answer 2

current assets - current liabilities

Question 3

what is considered current assets

Answer 3

cash n stock
debtors - if they r short term which they r
marketable securities - investments that can easily b sold or bought and can be turned into cash within a yr.
pre-paid liabilities - u paid for an asset, haven’t gotten it yet

Question 4

what r considered current liabilities

Answer 4

creditors - any type
s-t loans
portion of l-t debt - it has to say in the sheet thingy

Question 5

true or false revenue is not considered an asset

Answer 5

true loser - it isn’t cuz its the money the business gets naa it cant rly use that for the functioning if the business

Question 6

rewards and challenges of running a non-profit social enterprise

Answer 6

rewards:
CSR - providing something to the local community.
donations maybe, local community helping out - stock and the direct expenses - reducing environmental concerns.
growth of business, brand recognition.
source of pride
challenges:
reliance on local community and their donations etc - may cause it to operate at a loss
production may be impacted
workers - volunteers etc - how r they impacted etc
communication issues - scheduling issues depending on what bus it is
cash outflow (Cash outflow refers to the movement of cash from a business or individual to another party or entity. It represents any expenditure or payment made by the business that results in a decrease in its cash balance).
capital employed and how that may be impacted

Question 7

how to calc gross profit

Answer 7

sales revenue - cogs

Question 8

what to mention when ur talking about the relationship between changes in the current ratio thru-out the yrs and the relationship within the profit margin changes throat the yrs

Answer 8

current ratios - liquidity ratios - changes - for every one dollar of current liabilities, it had a certain amount of current assets it could liquidify to pay the liabilities back - look at the relationship and talk bout the liquidity ratios generally, why is it increasing/decreasing, what can u do to help this?
how to improve current ratio - increase debtors - owe at later date u , reduce ur cl’s and increase ur ca’s

profit margin - profitability ratio - outline the relationship (%) out of 100 - what r the vibes, did it increase/decrease - link it to the business in question - how can u help this
profit margin - negotiate suppliers n ur landlords n shit - electricity - admin, stuff, morale, motivation, productivity - salaries -
reduced profitability = lesser profits to retain and fund ongoing operations, vise versa.

Question 9

explain one economy of scale and one diseconomy of scale

Answer 9

EOS:
bcz of growth bus is able to reduce its per unit cost of production.
- specialized workers
- raw materials in bulk

DOS: cuz of growth bus experience increased per unit production costs
- overcrowded work areas
- maintenance costs increasing
- fewer resoruces

elaborate on this - mention the impacts, what could this do, who could it affect.

Question 10

relationship between investment, profit and cash flow.

Answer 10

1. define it
2. link to stimulus
3. apply concepts to stimulus, what will happen if this continues, how to improve, what to do, what is happening etc
   5, refer to the financial figures provided.

investment: Investment in a business refers to the allocation of capital or resources with the expectation of generating future returns or profits.

profit: Profit refers to the financial gain realized by a business or individual after deducting all expenses from total revenue. It represents the surplus amount remaining after all costs associated with producing goods or services have been subtracted from the revenue generated by selling those goods or services.

cashflow: Cash flow refers to the movement of cash into and out of a business or individual’s finances over a specific period of time. It is a crucial aspect of financial management as it reflects the liquidity, solvency, and overall health of an entity.

investments are made to generate profit, which in turn contributes to positive cash flow, enabling further investments and sustaining the financial health and growth of the business.