JSL Year 13 Flashcards
08/06/17
What is a mission statement
A formal summary of the aims and values of a company, organisation or individual
08/06/17
What is a vision statement
What an organisation would like to achieve or accomplish in the mid or long term future
08/06/17
What is meant by an aim and what is an objective
Aim - goals of the businesses future which is a statement of purpose
Objectives - these are statements of specific outcomes that are to be achieved
08/06/17
What is a tactical and what is a strategic objective
Tactical - immediate short term desired result
Strategic - long term organisational years
09/06/17
What are private costs
Those costs which occur in transaction (e.g. labour and machinery)
09/06/17
What are social costs
Those costs outside the transaction (e.g. noise pollution)
14/06/17
What is meant by a hierarchy of objectives
This is a tool that helps analyse and communicate the project objectives
14/06/17
What is meant by a mission and a vision
Mission - the overall purpose of the business
Vision - the overall aspiration of the business
14/06/17
What is meant by aims/goals
General statements of what the business intends to achieve
14/06/17
State impacts of setting aims/objectives
Clearer focus Optimum use of resources Effective use of time Peace of mind Clarity to decision making Easier measurement of what you do More freedom of thought Easier communication with others Motivate employees
22/06/17
What are business strategies
A plan of action to take the business forward
22/06/17
What is an internal audit and what is an external audit
Internal: strengths and weaknesses
External: PESTLE (government, technology)
23/06/17
Explain the anagram of PESTLE
Political factors - government etc
Economic factors - is the economy favourable (confidence)
Social factors - what are society trends (attitudes and demographics)
Technological factors - available ICT
Legal - all UK and EU laws
Environmental issues
06/07/17
What are Porter’s 5 forces?
Threat of substitution Buyer power Threat of new entrants Supplier power Competitive rivalry
07/09/17
Why do businesses fail?
Too much stress on the owner Not enough funds Poor quality of a business plan Lack of interest Poor communication Competition Poor spending
07/09/17
What are the consequences of failure?
Job losses
Unlimited liability
Knock on effect on others
Personal reputation
07/09/17
What are the 5 stages of how to change a failing business
1) Identify the exact problem(s)
2) Remove as many unnecessary costs as possible
3) Put in a business plan to increase revenue
4) Have efficient production, marketing, finance
5) Follow the plan and evaluate it
08/09/17
What is a risk
What you may lose. The higher the risk, the higher the reward
08/09/17
What is meant by uncertainty
Not knowing whether the risk will pay off or not
15/09/17
What are the main financial objectives
Income statement objectives (profit and loss)
Balance sheet objectives (value of the business)
Cash flow objectives (working capital)
Your stakeholders will be very interested in some or all of these objectives
You can compare one year to the next (with caution)
15/09/17
What are the factors influencing objectives
Size of the market Size of the business In line with company budget The economy Competition Government and taxation Bank of England
15/09/17
Why are financial objectives set?
Helps investors decide to invest Keep shareholder confidence Helps scrutinise performance Banks will decide to lend or not It's a legal requirement Used as benchmarking
15/09/17
What is the objective of a balance sheet
To increase the value of the business
18/09/17
What are the two types of accounting
Financial accounting
Managerial accounting
18/09/17
What is meant by a business in receivership
A special person decides what happens to the business next (sold, assets sold and creditors paid back etc)
18/09/17
What is meant by a business in administration
This is someone who is appointed by the courts to take over the business but the business can’t be liquidated (put into cash)
18/09/17
What are the 7 types of accounting principles
Consistency Going concern Matching/Accruals Materiality Objectivity Prudence Realisation
18/09/17
What is meant by consistency as an accounting principle
Doing the same layout each year
18/09/17
What is meant by going concern as an accounting principle
Operating as normal - not assuming anything irrational is going to happen
18/09/17
What is meant by matching/accruals as an accounting principle
Date of transaction - when you record when an order happens
18/09/17
What is meant by materiality as an accounting principle
Assets which make a difference - assets that have some value
18/09/17
What is meant by objectivity as an accounting principle
Realistic value - where you put a realistic value on an asset
18/09/17
What is meant by prudence as an accounting principle
Conservatism - round income down, round expenses up
18/09/17
What is meant by realisation as an accounting principle
When goods legally change hands - when goods are actually handed to the consumer that must be a legal recognised contract
18/09/17
What is meant by the acronym GAAP
Generally Accepted Accounting Principles
18/09/17
What is meant by accrual and matching principle (date of transaction) as a GAAP
You must record something when it happens
18/09/17
What is meant by monetary unit assumption (quantifiable transaction) as a GAAP
Only records valuable assets
18/09/17
What is meant by a full disclosure assumption as a GAAP
Where a business is expected to disclose income/expenditure
18/09/17
What is meant by a time period assumption as a GAAP
All accounts take place in the agreed tax year (generally April to March)
18/09/17
What is meant by an economic entity assumption as a GAAP
The owner is separate from the business
18/09/17
What is meant by revenue recognition as a GAAP
A transaction is recorded when it happens
18/09/17
What is meant by a cost principle as a GAAP
A business only records the cost of the asset when they bought it
18/09/17
What is meant by the going concern principle as a GAAP
A business is assumed to be working as normal
18/09/17
What is meant by the conservatism and consistency as a GAAP
Round income down, round expenses up
18/09/17
What is meant by materiality as a GAAP
Any asset that has a value or which make a true difference
18/09/17
What is meant by logistical as a GAAP
Delivering goods
27/09/17
What are the factors which affect payback
Quality Longest lifespan Finance Payback time Will the investment maintain its value in the long term?
27/09/17
Advantages of accounting rate of return (ARR)
Provides a percentage return which can be compared with a target return
Looks at the whole profitability of the project
Focuses on profitability - a key issue for shareholders
27/09/17
Disadvantages of accounting rate of return (ARR)
Doesn’t take into account cash flows - only profits
Takes no account of the time value of money (inflation)
Treats profits arising late in the project in the same way as those which might arise early
27/09/17
Advantages of net present value (NPV)
Takes into account money will lose value
27/09/17
Disadvantages of net present value (NPV)
Guess work as you don’t know how much the figure for inflation will be
06/10/17
What is meant by depreciation
This is a reduction in the value of an asset over time
06/10/17
How do you calculate reduced balance depreciation
This is calculated by charging a higher rate in the early part of the assets life
Step 1: calculate the depreciation charge by using the following formula: depreciation charge per year = (book value - residual value) x depreciation factor
Step 2: subtract the depreciation charge from the current book value to calculate the remaining book value
11/10/17
What is meant by an index number
This allows you to make comparisons over time. You start with ‘the base year’.
Helps you to make true judgements in terms of performance
19/10/17
What is meant by cash flow
This is all about money flowing in and out of the business
19/10/17
What are some of the causes of cash flow problems
Stock issues (mislaid, stolen etc) Debtors not paying Not selling enough Too much stock - cash tied up in warehouse not doing anything External factors Recruitment costs Repairs of machinery Overtrading - diseconomies of scales, no space for storage
19/10/17
What are some of the ways a business could improve cash flow
Sell more to existing customers or new customers Get rid of overdraft Put prices up Factor debts to debt collecting agency Marketing Just in time production Stagger payments Leasing not buying Change debts for loan repayment
19/10/17
What is the purpose of understanding cash flow
Helps monitor the business
Helps attract investors
Informs the marketing team if they need to launch promotions
Helps you look at when you make payments
Helps set prices and sales targets
19/10/17
What are the limitations of understanding cash flow
Changes to interest rates Changes in the economy Seasonal issues World events Competitors behaviour
20/10/17
What is a budget
This is allocating a set amount of money each month for various expenses
20/10/17
What is meant by a variance
This is where there is a difference between planned budget and the actual outcome of the budget
20/10/17
What are the many problems that arise when trying to budget for the year? (At a local B and B)
May overestimate the amount of customers
Could be a natural disaster which affects trade
Competition could arise
May underestimate the amount of electricity used
Overestimate sales
20/10/17
Internal sources of finance (short, medium and long term)
Short - money from sales, stock
Medium - cash reserves, retained profit, personal savings
Long - selling assets, sales and leaseback
20/10/17
External sources of finance (short, medium and long term)
Short - credit card, overdraft, trade credit, debtors
Medium - bank loan, venture capital (investors)
Long - shareholders funds, mortgage
06/11/17
What is meant by variable and fixed costs
Variable costs - change depending on output (e.g. raw materials)
Fixed costs - remain the same no matter how much is produced (e.g. rent, insurance)
06/11/17
How do you work out contribution
Selling price - variable cost
06/11/17
What is the contribution formula
Fixed costs/contribution
09/11/17
List sources of long term finance
Debentures Share issue/preference share Leasing Hire purchase Sale and leaseback
09/11/17
What is meant by debentures
An ‘I owe you’ between businesses. Selling brands and paid back with interest
09/11/17
What is meant by share issue/preference share
When a business issues more shares to already existing shares but the share price per share decreases
09/11/17
What is meant by leasing
Paying to temporarily own something. It does come with terms and conditions (never the legal owner)
09/11/17
What is meant by hire purchase
When you rent a product and the cost of renting goes towards the price of the product (instalments)
09/11/17
What is meant by sale and leaseback
Selling an asset, then leasing it back
10/11/17
What is the importance of financial strategy
Managing cash flow Running within budget Generating sales volume Generating operating profits Improving the balance sheet Keeping working capital active Securing finance for future needs
10/11/17
Explain how a business could improve its balance sheet
Get money off debtors - could factor off debts
Increase profits which increase retained profits
Reduce liabilities so much (decreased mortgage each year)
15/11/17
What is meant by adding value
An improvement or addition to something that makes it worth more
15/11/17
How can you add value
Improved quality Greater speed of service Branding Unique selling point Better design More convinience
17/11/17
Problems associated with being an inventor
Multinational companies don’t want your investment as its too much of a risk to their products meaning launching your product can be very difficult to be recognised
Inventions can be a hit or miss
Likelihood of failure can be a major cost and time effort
Lack of finance and support
Can be very ineffective for a long time
Opportunity cost - leaving a job and going into a business by yourself
Material costs of creating the product
Idea being copied
Technology can change. People hate change (retraining and job losses)
20/11/17
What is meant by project management
This is the application of methods, knowledge, skills and experience to achieve the project objectives
e.g./ planning, executing, monitoring, completing
20/11/17
What does critical path analysis allow you to do
Calculate the overall time of a project
Put tasks into order and allocate a completion time
Can see what activities can be run simultaneously
20/11/17
What is meant by the dummy activity
This is when several projects are going on at the same time that are ultimately dependant on each other
e.g/ The Olympic village, the velodrome, the aquatics centre
20/11/17
What does total float mean
A float shows how much an activity may overrun before it has a large effect on the entire project
Formula: LFT - duration - EST = room for delay
LFT = latest finishing time
EST = earliest starting time
20/11/17
What is meant by PERT
Program, evaluation and review technique
20/11/17
Formula for PERT
(optimistic time)+(most likely x 4)+(pessimistic time)/6
20/11/17
What is a gantt chart
A type of bar chart that illustrates a project schedule
They illustrate the start and finish dates of the elements of a project
Terminal elements and summary elements compromise the work breakdown structure of the project
23/11/17
What is meant by free float
What if one activity runs over? Free float is what effect will it have on the next activity (but not the final outcome of the project)
23/11/17
Formula for calculating free float
EST of next activity - duration of our activity - start of our activity
23/11/17
What is meant by total float
Shows how much an activity may overrun before it has a huge knock on effect on the entire project
23/11/17
Formula for calculating total float
LFT - duration - EST = room for delay
29/11/17
Formula for testing the productivity of staff
Number of goods sold/average number of employees
29/11/17
Formula for testing productivity of machines
Sales revenue/value of machines (non current assets)
29/11/17
Simplest formula for calculating productivity
Outputs/inputs
29/11/17
Formula for testing wages on sales
Sales revenue/wage bill
29/11/17
Ways to improve productivity
Motivation techniques Targets Monitoring staff Better machinery Training Marginal gains Factory layout
01/12/17
Diseconomies of scales to large businesses
Poor communication Technological issues as machinery could break Excessive stress/work Laziness Stock issues Co-ordination
04/12/17
What does capacity utilisation mean
What % of the business is currently being used
04/12/17
Formula for capacity utilisation
(Current output/maximum potential output) x 100
This is expressed as a %
04/12/17
Benefits of low capacity
More one on one feedback
More room for innovation - less pressure on staff
Top quality service
Less labour turnover so better communication
Motivation
04/12/17
Why can capacity be low
Customer base Competition Other choices Opportunity cost External environment - economy increase/decrease
04/12/17
Benefits of operating at full capacity
Spread fixed costs (economies of scales)
Less wastage of resources
Profits increase
Employees are busy so more motivated
Opportunities for employee bonus payments
More competitive
Stakeholders will view the business in a favourable light
04/12/17
Disadvantages of operating at full capacity
Little or no opportunity for maintenance
Any additional orders will either be impossible to meet or will require significant additional costs
May put pressure on employees
Little or no time for in-house training
Possibility that the level of quality is affected
07/12/17
State 2 factors that would affect the maximum stock level held by a business
Size of business
How much storage space a business has
07/12/17
What does LIFO and FIFO mean
LIFO - last in, first out
FIFO - first in, first out
07/12/17
State 4 out of stock costs
Expensive deliveries (emergency stock)
Inconvenience
Loss of customers (demotivated staff)
May run out of other stock (substitute stock)
13/12/17
Benefits and limitations of Kaison/quality circles/continuous improvement
Benefits - improvement within production to meet different targets, motivating
Limitations - while staff have meetings, no production is made, could be overly critical
13/12/17
Benefits and limitations of JIT
Benefits - good cashflow, less chance of stock being damaged or stolen, less insurance
Limitations - no margin of mistakes, less storage space so no room for expansion, fails to take into account future business objectives
13/12/17
Benefits and limitations of TQM
Benefits - stops mistakes being carried forward, eliminates early error, should end up with higher quality
Limitations - employ more people so wages are increased, slows down production, time consuming
13/12/17
Give definitions for kanban, ergonomics, cell production and jidoka
Kanban - automatically re-order stock once it reaches a certain level
Ergonomics - examines relationship between machines over labour performance
Cell production - everyone in the team makes the product together
Jidoka - stop production until the mistake is fixed
10/01/18
Briefly describe logistics
This concerns supply chain management (where and when stock arrives)
Looks at the integration of supplies, production, warehousing and transportation
The key is to reduce costs at every stage of logistics
12/01/18
Describe benchmarking, quality circles, kitemark, zero fault and TQM
Benchmarking - compare to the experts
Quality circles - sit around as a team and identify what needs to be improved
Kitemark - you can apply for an award to impress customers (ISO awards)
Zero fault - spot mistakes early so no faults at the end
TQM - step by step quality control
12/01/18
What is the difference between quality control and quality assurance
Quality control is done at the end of a product and quality assurance happens while the product is being made and after the product is sold
12/01/18
Give 5 steps to using benchmarking to improve business profits
1) Planning
2) Data gathering
3) Analysis and integration
4) Implementation and execution
5) Recalibration
15/01/18
How do you calculate how much wastage is in a business
(Wasted output/total output) x 100
18/01/18
What is forecasting
This is using existing data to predict future trends
18/01/18
Give some qualitative forecasting methods
Delph technique (expert opinion)
Brainstorming (bringing together a team of experts)
Consumer opinion/expectations
Leading academic opinions (university professors)
Frontline staff opinions (often sales staff)
18/01/18
Describe Time Series Analysis
Calculates the average over a period of time
The raw data: looks at trends over time
Cyclical variations: looks at economic booms and downturns
Seasonal variations: takes into account seasonal factors (Hotels at Christmas, for example)
Random fluctuations: unexpected change in trends (water shortage leads to a boom in bottled water sales)
18/01/18
Limitations of forecasting
Only as reliable as the data put forward
Businesses can’t assume that past trends will continue
