Operations

Question 1

define business

Answer 1

A business is an organisation that exists to provide goods and services on a commercial basis to customers

goods are physical
services are intangible (cant be touched)

Question 2

5 benefits of business on the economy

Answer 2

Create Employment & Develop Human Capital

Drive Innovation through R&D and New
Products

fuels the economy Pay Taxes on profits earned & collect taxes for Govt

Create wealth by providing returns on investment

human development

Question 3

define mission

Answer 3

A qualitative statement of the business’s aims, a strategic perspective, a vision for the future

Question 4

define ordinary share capital

Answer 4

The money received, when a business sells shares

Question 5

ordinary share capital equation

Answer 5

share issue price x the quantity of shares issues (sold)

Question 6

what are the two types of shares

Answer 6

equity and preference

Question 7

4 Role of Shareholders

Answer 7

To provide financial support
To gain control of a business
To receive dividends
To make capital gains

Question 8

what are Influence on share price

Answer 8

State of the economy
Performance of the company
Competition in the market
Proposed takeovers
Investors’ expectations and their response to rumours

Question 9

Define unlimited liability

Answer 9

The owners of the business are liable for ALL of the debts the business may have

Question 10

Define limited liability

Answer 10

The owners of the business can ONLY lose the amount of money they have invested into the business

Question 11

Define stock exchange

Answer 11

When PLC (public company) wants to raise finance by selling shares to public

Question 12

Define IPO, initial public offering

Answer 12

First sale of shares to the public by the company.

Once shares are shared, owners sell on stock exchange

Question 13

Define ordinary share capital

Answer 13

The money received when a business sells shares

Question 14

Define Market capitalisation

Answer 14

Total value of issued ordinary shares of PLC

Question 15

4 reasons why your change business legal structures

Answer 15

Finance to expand

Size of business, type of investment required

Level of risk involved

Degree of control desired by owners

Question 16

define stakeholder

Answer 16

anyone who is affected by a business or has an interest or influence on how a business operates

Question 17

define public sector

Answer 17

business owned and payed for by the government
eg. MOD, NHS

Question 18

define insolvent

Answer 18

unable to pay debt back before its due (can renegotiate due date)

Question 19

define bankruptcy/liquidation

Answer 19

companies who are unable to repay their debts

Question 20

define external environment

Answer 20

external competitive environment a business operates in (extent of competition varies from industry to industry)

general external competitive environment involve broader influence

Question 21

define PESTLE analysis

Answer 21

framework for assessing the key features of the external environment facing a business

Question 22

what does PESTLE stand for

Answer 22

political, economic, social, technological, legal, environmental

Question 23

Define break even

Answer 23

revenue and total costs are the same

Question 24

Define receivables

Answer 24

the amount owed to a business by its customers following the sale of products or services on credit

Question 25

How to calculate closing balance

Answer 25

net cash flow + opening balance

Question 26

Wha is opening balance

Answer 26

the closing cash balance from the previous period

Question 27

Define revenue

Answer 27

the money a company earns from the sale of its products and services

Question 28

Define labour costs

Answer 28

calculates the total cost of employee pay and benefits