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business studies > paper 2 advanced information > Flashcards

paper 2 advanced information Flashcards

1
Q

What is break even

A

The point where a businesses costs and total revenue are equal.

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2
Q

How do you calculate break even

A

Contribution per unit

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3
Q

How do you calculate contribution per unit

A

selling price - variable cost per unit

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4
Q

How do you calculate total contribution

A

total output x contribution per unit

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5
Q

What is the margin of safety

A

The difference between break even point and the current level of output.

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6
Q

How do you calculate margin of safety

A

current level of output - break even point

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7
Q

What are the benefits of break even analysis

A

Useful guideline to help business make decisions.

Analyse effects of changing customers, prices and costs.

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8
Q

What are the negatives of break even analysis

A

Costs are rarely constant.

Presumes businesses will sell all output.

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9
Q

What are the negatives of budgets

A

Unexpected changes affect budgets

If they are unrealistic demotivating

Past data doesn’t mean you know the future

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10
Q

What are the benefits of budgets

A

Motivational tool

Help business plan

Identify cash flow problems early

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11
Q

How do you calculate a budget variance

A

Actual - Budgeted

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12
Q

How do you calculate cash flow

A

Inflows - outflows

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13
Q

How do you calculate sales revenue

A

Price x quantity

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14
Q

How do you calculate gross profit

A

Sales revenue - cost of sales

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15
Q

How do you calculate operating profit

A

Gross profit - operating costs

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16
Q

How do you calculate net profit

A

Operating costs plus or minus interest

17
Q

How do you calculate profit margin

A

(type of profit)
——————— x100
Sales revenue

18
Q

How do you calculate a current ratio

A

Current liabilities

19
Q

How do you calculate an acid test ratio

A 
  Current liabilities
20
Q

How do you calculate average rate of return

A

(Net return from project / Number of years)
————————————————————— x100
Asset’s initial cost

21
Q

How do you calculate gearing

A

Non-current liabilities
——————————– x100
Capital employed

22
Q

How do you calculate return on capital employed

A

Operating profit
————————– x100
Capital employed

23
Q

How do you calculate capital employed

A

Total equity + Non-current liabilities

24
Q

What is the definition of current asset ratio

A

How many pounds of current assets a business has for every pound of current liabilities.

25
Q

What is the definition of a gearing ratio

A

The percentage of a business capital invested that comes from external finance.

26
Q

What is the definition of ROCE?

A

The percentage of a business’ capital invested that has been returned as operating profit

27
Q

What is Acid Test Ratio?

A

How many Pounds(£) of highly liquid current assets a business has for every Pound(£) of current liabilities

28
Q

What is capital employed?

A

The total capital invested

29
Q

What is Capacity Utilisation? (formulae)

A

current Output
———————— x 100
Maximum Output

30
Q

SWOT analysis?

A

Strengths, Weaknesses, Opportunities and threats
opportunities, threats (future)
strengths and weaknesses (current)

31
Q

What is PESTLE analysis? (external influence)

A

Political - Actions taken by national and international authorities.

Economic - State of the economy.

Social - Social change is the changing demands of society.

Technological - Developments of new technologies create new opportunities.

Legal - Framework a business operates within.

Environmental/Ethical - A business pays for its pollution.

32
Q

What is porters five forces

A

Buyer bargaining power

Threat of new entrants

Rivalry among existing competitors

Threat of substitutes

Supplier bargaining power

33
Q

Limitations of Quantitative Sales forecasting?

A
  • Less valuable and volatile markets
  • Unlikely to take into account external shocks
  • Past data has little bearing on future data
34
Q

What is extrapolation

A

Taking Historic data and identifying a trend line based on the historic trend

35
Q

what is Correlation

A

Identifying where one factor leads to an increase or decrease in another

36
Q

What is Moving averages

A

Flatting out fluctuations in data that could be caused by seasonal/ trend based sales.

Doing a three month moving average take three months add them, then divide by three or however many months there are.

37
Q

What are the benefits of quantitative sales forecasting

A

Spot customer trends.

business studies (8 decks)

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