NORRIS TEST Flashcards
What is Peer to Peer Lending?
where INDIVIDUALS LEND to other individuals WITHOUT PRIOR KNOWLEDGE of them, on the INTERNET
What are 2 Benefits of Peer to Peer Funding?
- EASY ACCESS , CONVENIENT, business can get ACESSS to funding WITHIN A WEEK once approved
- INTEREST RATES are BETTER for both borrowers and lenders THAN those offered by a bank
How do you find the Closing Balance in a cash flow forecast?
Closing Balance = Net Cash Flow + Opening Balance
What is Sales Forecasting?
it ESTIMATES the VOLUME or VALUE of future sales using market research or past sales data
What are 3 purposes of Sales Forecasting?
- STOCK CONTROL
- HUMAN RESOURCES - to employ more workers to cope with seasonal DEMAND
- avoid cash flow problems
What are 3 factors that affect Sales Forecasts
- Consumer Trends
- Economic Variables
- Action of Competitors
What is ACID TEST RATIO?
A MORE SEVERE test of liquidity as it’s similar to current ratio but EXCLUDES STOCK FROM CURRENT ASSETS
What is the formula for Acid Test Ratio?
ATR = ( CURRENT ASSETS - INVENTORY ) / CURRENT LIABILITIES
What is Liquidity?
The ABILITY of a business to TURN its ASSETS INTO CASH to pay its current liabilities
What is the Formula for Current Ratio
CR = Current Assets / Current Liabilities
What are 3 Ways that LIQUIDITY can be IMPROVED?
- REDUCE the amount of STOCK IT HOLDS, goods dispatched faster to customers, FEWER STOCK can INCREASE CASH
- EXTEND CREDIT with selected SUPPLIERS - saved cash by delaying payments
- REDUCING CREDIT OFFERED to customers e.g. insisting customers pay in 30 days not 90
What does a BALANCE SHEET show?
it’s shows FINANCIAL POSITION
it’s a document that provides SUMMARY of it’s ASSETS, LIABILITIES and CAPITAL
What is PROFIT?
the FINANCIAL GAIN of a business through trading and can be found be deducting expendixture from income
What are 3 Ways to Improve Profitability?
- REDUCE COSTS
- INCREASE REVENUE
- using existing resources more EFFICIENTLY
What are the IDEAL RATIOS?
current and acid
Current = 2:1 Acid = 1:1
