MANAGEMENT: finance + HR

Question 1

cash flow statement

Answer 1

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

Question 2

different types of finance

Answer 2

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

Question 3

other equations

Answer 3

COGS= opening stock + purchases - closing stock
Gross profit = sales/revenue - COGS

Net profit = gross profit - expenses

Assets = liabilities + owners equity/net worth

Question 4

what are assets

Answer 4

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

Question 5

What are liabilities

Answer 5

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

Question 6

what is owner’s equity

Answer 6

funds contributed by owner(s) also capital used to start business

Question 7

what is HR

Answer 7

business function that deals with the relationships between the employer and the employees of the business

Question 8

what is aquisition

Answer 8

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

Question 9

pos + neg internal aquisition

Answer 9

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

Question 10

pos + neg external acquisition

Answer 10

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

Question 11

what is training

Answer 11

improves skills and abilities
-teach employees new skills + help learn tasks associated with jobs
- develop + maintain skills - improve skills, abilities, knowledge of staff

Question 12

what are the benefits of training

Answer 12

• 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

Question 13

pos + neg of internal training

Answer 13

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

Question 14

pos + neg external training

Answer 14

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

Question 15

what is maintenance + contract

Answer 15

motivate employees to remain within business
- use employee agreemants/contracts - legally binding, formal agreement between employer and employee

Question 16

contract types - maintenance

Answer 16

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

Question 17

other contract types ( working conditions)

Answer 17

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

Question 18

adv + dis of awards

Answer 18

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

Question 19

monetary/non-monetary beneficts

Answer 19

monetary: rewarding employee efforts through financial compensation - pay rates
non-monetary : rewards such as conditions : fringe benefits
family, sick, medical, maternity leave

Question 20

what is seperation

Answer 20

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

Question 21

strategies for managing cash flow

Answer 21

leasing assets instead of buyinh
JiT inventory- no storage costs
credit card when cash reserves are low
discounts for debtors for early payment

Question 22

importance of cash flow

Answer 22

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

Question 23

consequences of cash flow problems

Answer 23

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)

Question 24

other definitions

Answer 24

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

Question 25

sources of fincance: internal equity

Answer 25

from outset of business
owners equity
retained profits: funds kept in business as source for future activities
sale of unwanted assets

Question 26

sources of finance: external

Answer 26

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

Question 27

debt: short term sources

Answer 27

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

Question 28

debt : long term sources

Answer 28

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

Question 29

ethical business behaviour

Answer 29

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

Question 30

corporate social responsibility + each function+ goal

Answer 30

• 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

Question 31

adv + dis of CSR and ethical behaviour

Answer 31

adv: improves image , when gain goodwill through CSR - maintain employees , motivation for employees, better cutomer relations

dis: expensive, greenwashing, costomers impatient: no instant outcomes