The nature and purpose of business Flashcards
1
Q
What is a business objective
A
A long term goal the business wants to achieve
2
Q
Examples of business objectives
A
- profit
- survival
- growth
- cash flow
- social and ethical objectives
3
Q
What does SMART stand for
A
Specific
Measurable
Achievable
Relevant
Time bound
4
Q
Why do businesses set objectives
A
- provide a direction for the business
- can motivate staff
- all staff are working towards a common goal
5
Q
What is the relationship between mission and objectives
A
A mission statement is the overriding goal of a business
Objectives are set in relation to achieving the mission statement
6
Q
What is the importance of profit
A
To be reinvested back into the business to grow
Pay off debts and avoid liquidation
7
Q
Calculate : profit
A
Revenue - total costs
8
Q
Calculate : revenue
A
Selling price x quantity sold
9
Q
Definition : fixed costs
A
Stay the same regardless of output
10
Q
Definition : variable costs
A
Vary with output
11
Q
Calculate : total costs
A
FC + VC
