random Flashcards
what is the use to stakeholders of interpreting a financial statement
-The statement of financial position allows shareholders to analyse the assets structure of their business to see how their investment is been spent
-suppliers and creditors may also be interested to see whether the business will be able to pay its debts and any decisions around credit agreements.
-managers will use a statement of financial position to analyse the liquidity and level of risk associated with debt
what are the stakeholder interests in the statement of comprehensive income?
-Shareholders will be interested in the profit for the year as this may indicate potential returns
-Employees may be interested to indicate the potential for remuneration and rewards- profitability
-Managers, use revenue, gross profit and operating profit to measure performance and set targets
what is the value of ratio analysis?
it allows a business to calculate and compare trends over time
-shows greater insight in financial accounts on their own
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information can be used against benchmark data, such as an industry average
-can be used to assess the performance of all the functional areas of the business.
what are the disadvantages of ratio analysis?
-Does not take into account qualitative issues such as brand image of customer service performance
-Does not take into account the impact of long-term decisions such as investments today that may lower profitability in the short term, but booster in a long time
-Economic climate- ratio, do not take into account economic conditions of the performance of other businesses
what is business change
Business change as an organisation undergoes change by size structure, new ownership, transformational, leadership, external factors , or poor performance
-Change will often be to improve productivity, for example, adoption of a new team or change in structure with the aim of improving productivity
-It could also be for growing competitiveness or survival change within the business can improve competitiveness in the market
-Financial performance is refers to profitability being a driver for internally impose change
How many stakeholders respond to change?
-shareholders may withdraw investment for fear of change, not been successful
-Employees Mayfair for job, security and status within the organisation that could be clash of cultures
-Customers may negatively react to the new products or processes as it is different to what they used to
what are the reasons for resistance to change?
-self interest, individuals may lose out in terms of pay status or anticipating harder work
-Prefer role of the present state some employees may be very comfortable with the current situation and change will take them outside of the comfort zone
-Different assessment, some employees may simply disagree and not believe that changes necessary
-Misunderstanding employees may not see the need for change or may not understand what the change process will involve, and have fear of uncertainty
-change includes new technology, new ways of working new products, new structures, new processes and regulations or new members of staff
What are the preachers used to overcome resistance to change?
-education and communication can clearly share the reasons and logic behind the change and provide necessary training
-Facilitate and support gives employees what they need to accomplish the change along with encouragement and support
-Participation uninvolvement makes employs involved in the decision making process, so they have ownership of the change
-manipulation and co option. This involves and influences key people to get individuals with influence on board in new Centre Drive
-Negotiation and bargaining. This compromise may involve employees, receiving higher wages or better working conditions.
-Explicit or implicit coercion. Forcing change to using authority may involve threats or openly implied long-term success may be more important than short-term agreement.
what are corporate objectives?
call projected of a quantifiable, go to help achieve the aim
-The mission statement is used to portray aims and values of the business to consumers, and to set objectives within the business
-Mission statement, aims, objectives and strategies
-The benefits include focus, profitability and identity
-A mission statement helps to involve an motivate employees. In addition, it helps to develop a strong brand, which encourages loyalty.
-However, these statements can be unrealistic and overoptimistic. They could also be considered a waste of management time.
-If the statement is unclear, it can lead to inconsistencies within the business and the statement can become outdated over time and therefore strategies can’t be made
What is business failure?
-Business So you can come from internal factors, such as:
-Paul, cash flow management, a highly give company inaccurate, forecasting, Poor, marketing for business decision, making failure to innovate and poor management
-External factors that can cause business failure, may be;
-Political reasons, recession, social changes for example, healthy eating, and external shocks.
What are economic influences?
changes in the economy that affect businesses and their decisions
-They are external factors for example, inflation increased could increase the cost of producing products and supplies. Consequently, a business may have to charge higher prices to maintain profitability.
-An increase in interest rates. This makes it more difficult to take out loans and highly risky for companies that are highly geared. on the other hand, if interest rates decrease businesses could take advantage and consider borrowing
-Tax action, a decrease in taxes means I was likely more profit for the business. The business may also experience an increase in demand due to the rise in disposable income, a rise in tax costs can decrease competitiveness on the market .
what is legislation?
Legislation or rules imposed by the government to control business activity and ensure ethical behaviour
-They involve customer protection, environmental protection, employee protection and welfare, company, policy and health and safety
what are the impacts of legislation?
impacts of the business may include;
-I likely increase in costs as the business may have to take more drastic measures to meet these legislation laws, for example, health and safety, the cost of providing equipment for safety protection. Increasing wages to meet minimum wage if it increases
-Legislation can impact marketing in sales as it can create a stronger brand. Therefore it reduces the chance of a lawsuit from consumers.
-Legislation, ensures, high quality products, therefore, this may increase sales however, materials are likely to be more expensive
-Efficiency may increase if employees are satisfied with the work in condition
-There is an impact on HR. For example, that would likely be less absenteeism on Lois staff turnover and therefore lower levels of complaints within the company, which may make the business more attractive on the employee front.
Why me a business want to consider growth
-For economies of scale
-Increasing market power
-Maximising market share
-Increasing profitability
What are the disadvantages of growth?
-diseconomies of scale
-overtrading which can lead to over utilisation.
-Rapid growth
-Impact on communication and coordination
-Increasing the workload for employees may decrease motivation
