Theme 2 Flashcards
Overdraft
A= quick and easy. D= debt can increase rapidly
Bank Loans
A= no additional fees D= assets at risk
Trade Credit
A= allows the business to potentially sell the products. D= may loose supplier if they don't pay the bill in time.
Share Capital
A= does not cost the business. D= owners share reduces every time new investment is received.
Venture Capital
A= available for businesses which banks have deemed too risky to loan money too. D= larger percentages often given away to secure investment due to the increased risk.
Crowd Funding
A= reach wider audience. D= contributions not guaranteed.
Leasing
A= only pay a small sum, funds can be used for other business needs. D= don't own the asset, so have to keep paying.
Grant
A= does not usually have to be paid back. D= difficult to obtain as many businesses are competing.
Cash Flow Forecasting
A= can gain finance such as overdraft to cover short fall.
can help compare actual revenue, costs, profit and helps find solutions and problems to why the forecast could be low.
D= not always reliable, assumptions.
there may be unexpected costs in distribution or production.
Break Even Calculation
Fixed costs/contribution per unit
Contribution Calculation
selling price-variable cost per unit
Total Contribution Calculation
total sales x contribution per unit
Margin of Safety Calculation
number of output/sales-break even point
Net Profit Calculation
Operating profit-interest
Job Production
A= high quality. D= usually expensive raw materials.
Batch Production
A= reduces unit costs. D= staff become demotivated
Flow Production
A= large number of products made at a low price. D= time consuming and expensive to make any changes.
Cell Production
A= working in groups will improve communication. D= might not be efficient enough to ensure machines and staff are always working optimally.
Labour Intensive
A= tailor to customer requirements. D= high labour costs per unit.
Capital Intensive
A= high output of standardised products. D= cannot produce personalised products.
