MANAGEMENT: finance + HR Flashcards
cash flow statement
cash inflows= sales, payment of credit sales, income from investments
cash outflows: payments for stock, operating + nonoperating expenses
Cash flow balance = opening cash balance + inflows of cash - outflows of cash
different types of finance
cash flow statement: indicates movement of cash receipts and cash payments resuling from transactions over period of time
Income statement: summary of income earned and expenses incurred over a period of trading
balance sheet: represents business’s assets and liabilities at particular point in time - represents net worth of business
other equations
COGS= opening stock + purchases - closing stock
Gross profit = sales/revenue - COGS
Net profit = gross profit - expenses
Assets = liabilities + owners equity/net worth
what are assets
items of value OWNED
Current: things that can be converted to cash quickly - used within 12months e.g cash, accounts recievable, stock
Non-current: last longer period of time - more difficult to turn into cash >12 months e.g buildings, machinery, fixures etc
Intangibles - non physical e.g goodwill, trademarks, copyrights etc
What are liabilities
items of debt OWED e.g loans, credit card bills, cost of suppliers etc
Current: debt will be repaid next 12 months e.g overdrafts, credit cards, accounts payable
Non-current: long term debt take longer then 12 months to pay e.g mortgages, leases
what is owner’s equity
funds contributed by owner(s) also capital used to start business
what is HR
business function that deals with the relationships between the employer and the employees of the business
what is aquisition
hiring new employees
planning: identify staff needs - job analysis - determine exact nature required
recruitment: attract people o apply for position
internal: fill job vacancies with present employees rather then outside
external : fill jobs from outside business
selection: choosing/hiring most appropriate employee - testing/interviewing
pos + neg internal aquisition
positives:
- less expensive (reduce ad costs)
- quicker process - less applicants, known
- motivator for employee productivity
- familiar with business culture/goals
negatives:
- internal conflict with unsuccesful applicants
- no new perspective/less diversity
- no one may be suitable
-limited applicants
pos + neg external acquisition
positives:
- new ideas/perspectives
- more qualified/differing experience
- rapid business growth - increased employee numbers
negatives:
- expensive : cost of advertising
- unknown - dont know culture/goals
- increased induction/training costs
- tension in workplace - lack of recognition for current employees
- longer process
what is training
improves skills and abilities
-teach employees new skills + help learn tasks associated with jobs
- develop + maintain skills - improve skills, abilities, knowledge of staff
what are the benefits of training
- increased efficiencies in processes resulting in financial gain
- increased capacity to adopt new technology + methods
- increased innovation in strategies and products
- goals + objectives easily met
- increase monetary benefits to employees - more job satisfaction /productivity
pos + neg of internal training
Positives:
- less expensive - conduct more often
- quicker process/convenient
- tailored specifically to business needs
- remains at work- no hire replacement
- minimal disruption to business productivity
Negatives:
- less professional - less resources, training, qualifications
- less access to contemporary training
pos + neg external training
Positives:
- more qualified instruction
- higher qualifications
- gain new external experience
- meet new people
Negatives:
- more expensive
- time consuming
- not tailored
- disruption to work schedule and productivity
what is maintenance + contract
motivate employees to remain within business
- use employee agreemants/contracts - legally binding, formal agreement between employer and employee
contract types - maintenance
casual - paid hourly , recieve loading to make up for lack of benefits - used for flexibility
full-time - weekly wages + benefits -leave, sick days
part time: set number of hours a week
subcontraction: temporary staff, no benefits, variety of fixed hours
other contract types ( working conditions)
fair work act 2009: mandates minimum standards, mandated by state and federal law as award
common law: judges make decisions based on facts of case, guided by precedent.
awards: legal documents that outline the minimum pay rates and conditions of employment in an industry.
entreprise agreement: workplave level agreements that outline minimum standards
individual contracts: signed between workplace and individual, outlines individual conditions
adv + dis of awards
adv: set minimum pay and conditions
cover all employees performing similar job
dis: can be inflexible and therefore may not suit all employees/businesses
prevent recognition of individual initiative bc guaranteed minimum conditions regardless how productive they are
monetary/non-monetary beneficts
monetary: rewarding employee efforts through financial compensation - pay rates
non-monetary : rewards such as conditions : fringe benefits
family, sick, medical, maternity leave
what is seperation
employees leaving business
voluntary: leave own accord/free will e.g retirement, resignation, redundancy: job no longer exists due to change in operational requirements
involuntary: being asked to leave due to reasons beyong control
dissmissal, retrenchment: not enough work to justify paying individual
strategies for managing cash flow
leasing assets instead of buyinh
JiT inventory- no storage costs
credit card when cash reserves are low
discounts for debtors for early payment
importance of cash flow
identify periods of cash shortage = action taken
identify periods of cash curplus to plan expenditure and cash retention
secure additional finance if needed e.g loans
consequences of cash flow problems
relationships with suppliers deterioriate: can’t pay trade credit
workers may leave, can’t pay wages
cease trading
short term, cash more important than profit (without cash, cannot pay short term debts to be profitable)
other definitions
good will: intangible asset- added due to saved profits, good customer base and reputation
creditor: person or company to whom money is owed
debtor: person or company that owes money
inventory: another name for stock
overdraft: short term debt which allows a business to overdraw their cheque account by bank
sources of fincance: internal equity
from outset of business
owners equity
retained profits: funds kept in business as source for future activities
sale of unwanted assets
sources of finance: external
funds provided by sources outside of business
debt finance: bank/lending instituation - must repay, increased risk (insterest must be paid = higher level of revenue requires)
external equity finance: issuing shares of business - money invested in does not need to be paid , however lose some ownership
debt: short term sources
overdrafts:allows a business to overdraw their cheque account by bank to help overcome temporary cash shortfall - minimal costs, interest rates lower
commercial bills: loan provided for lager amounts over 30 day periods - secured against business’s assets, may extend to long term (paid in full)
factoring: selling accounts recievable to thrid party at discount price - immediate access to funds = improve cash flow
debt : long term sources
mortgage: loan secured against property of borrower used to finance prperty,equipment - repaid with interest over intervals within fixed time frame
debentures: investor lends money to company and in return the company issues a debenture with promise to make regular interest payments for defined term then repay the loan at a particular date in future
unsecured notes (bonds) : relies on good will that business will repay
leasing: payment of money for use of equipemtn that is owned by another business. long term sourcing of borrowing, avoids large outlay of funds for purchase of equipemnt
benefit: lease repayments are tex deductible and equipiment can be constantly upgraded
ethical business behaviour
standards to business behaviour:
- fair/honest business practices
- decent workplace relations
- conflict of interest situations
-accurate financial management
- truthful communication
ethical behaviour: acting in ways consistent with what society and individuals typically believe are acceptable values
corporate social responsibility + each function+ goal
- go beyond the minimum legal requirements of legislation to meet higher levels of social outcomes
goals: achieve expanding business, providing for greater good of society
operations: sustainable and ecologically friendly inputs, avoid exploitation of unethical labour outsourcing
marketing: target environmental/social/ethical conscious consumers, develop positive reputational capital
finance: honest and accountable for records, not using tax minimisation
HR: actively implementing affirmative action, equal opportunity initiatives - flexibility and developing diverse workforce
adv + dis of CSR and ethical behaviour
adv: improves image , when gain goodwill through CSR - maintain employees , motivation for employees, better cutomer relations
dis: expensive, greenwashing, costomers impatient: no instant outcomes
