PAPER 2 EXTRAS I CAN'T REMEMBER Flashcards
Disadvantages of a Horizontal Merger
- Conflicts and disputes between the companies involved
- Culture clash as people adapt to a new corporate culture
- Loss of control by original owners or Board of Directors
- Potential diseconomies of scale leading to increased bureaucracy and less effective decision-making.
Disadvantages of a Vertical Merger
- Potential complications such as over-reliance on one supplier or distributor
- Integration challenges
- Potential regulatory scrutiny if the merger significantly impacts market competition
Where are Liabilities Found
- Balance sheet
Meaning and Importance of Liabilities to a Business
Liabilities represent the legal obligations of a business to repay its lenders or suppliers at a later date. They indicate the amount of money owed by the business. Managing liabilities is crucial for maintaining the company’s financial health and ensuring that it can meet its long-term and short-term obligations.
Pros and Cons of Current and Non-current Liabilities
Generally, current liabilities can offer flexibility and short-term financing options but require prompt repayment. Non-current liabilities provide long-term financing but commit the business to longer-term obligations.
Calculating Cost of Sales
The cost of sales is typically calculated by adding the beginning inventory to the purchases made during the period and then subtracting the ending inventory.
Calculating Capacity Utilization Rate
The formula for calculating the Capacity Utilization Rate is (Actual Output / Productive Capacity) × 100.
What is Contribution?
Contribution refers to the difference between sales and the variable costs of the product or service. It’s a measure of the ability of the sales to cover fixed costs and generate profit.
Pros and Cons of Lean Production
Pros: Reduces waste, improves efficiency, and enhances product quality.
Cons: High initial implementation cost, requires continuous employee training and engagement.
In favor of quality assurance
Preventive Approach: Quality Assurance (QA) is a proactive process aimed at preventing defects by focusing on the production process. It helps in ensuring that the process is adequate to produce a quality product in the first instance.
Cost Efficiency: By preventing defects at the source, QA reduces the costs associated with fixing issues after they have occurred, which is often more expensive.
Consistency and Reliability: QA promotes consistency and reliability in the production process, which ensures that the output consistently meets or exceeds customer expectations.
Boosts Employee Morale: A clear and structured QA process helps in setting clear expectations for employees, which can boost morale and productivity by providing a sense of purpose and direction.
Enhances Brand Reputation: By ensuring high-quality outputs consistently, QA helps in building and maintaining a strong brand reputation, which can lead to increased customer trust and business growth.
In favor of quality control
Prevents Defective Products: Quality Control (QC) is instrumental in catching defects or issues in products or services before they reach the customer, ensuring that the final output meets the quality standards.
Immediate Corrections: It allows for immediate action and corrections to be made in the production process, reducing waste and saving on costs associated with reworking or scrapping defective products.
Enhances Customer Satisfaction: By preventing defective products from reaching the customer, QC helps in maintaining and enhancing customer satisfaction and loyalty.
Regulatory Compliance: QC helps in ensuring that products comply with industry standards and regulations, which is crucial for avoiding legal issues and fines.
Continuous Improvement: Regular inspection and testing processes involved in QC contribute to the continuous improvement of products and processes by identifying areas for enhancement.
