Theme 2 Flashcards
What is working capital?
A measure of a business’ ability to meet day to day expenses.
What are loans?
A method of raising finance where a lender provides capital to a borrower and they agree to repay the money, with interest, over a period of time.
What is venture capital?
Investment from an already established business in return for a percentage of the new business.
What is leasing?
A method of raising finance through a contract that allows a business to benefit from the use of an asset without owning or buying it, like renting.
What is a business plan?
A document that describes how an entrepreneur proposes to set up a new business.
What is break-even?
The level of output at which the business makes neither a profit nor a loss.
What is buffer stock?
Part of stock control; stock held by a business to cope with unforeseen circumstances, e.g., sudden increase in demand.
What is just in time (JIT)?
A production technique that minimises the amount of stock held at each stage of production to help minimise costs.
What is quality control?
A form of quality management that involves checking over a good or service at the end of the process.
What is environmental protection?
An example of legislation that ensures a firm’s operations meet legally acceptable standards, e.g., environment act.
What is competition policy?
An example of legislation that promotes healthy competition in markets, leading to fair trade and giving consumers greater choice.
What is internal finance?
Funds used from within a business, which can be used to establish a business, e.g., owners capital or personal savings.
What is owners capital?
When an entrepreneur invests their own money into a business, e.g., from personal savings, showing confidence in the business.
What is retained profit?
Profit kept from within the business to help finance future activity.
What is sale of assets?
A method of raising short-term finance by disposing of a business asset in return for cash, helping improve short-term cash flow.
What is external finance?
Funds raised from investors, e.g., business angels or lenders.
What is share capital?
A method of raising finance by selling shares of the business, a form of equity capital.
What is an overdraft?
A method of raising finance that allows a business to withdraw money that is not in the account.
What are grants?
Fixed amounts given to the business from the government or organisations to fund a specified project.
What is limited liability?
An investor’s liability is limited to the amount invested or promised in share capital.
What is unlimited liability?
The owners of a business are responsible for the total amount of debt the business incurs, risking personal belongings.
What is sales forecasting?
The process of predicting future sale volumes and values based on market research or past sales data.
What is sales revenue?
Total amount of money coming into a business from the sales of a good or service in a specified period.
What are fixed costs?
Costs to a business that stay the same regardless of business input/output, e.g., rent.
What are variable costs?
Costs to a business that change in relation to output, e.g., raw materials.
What is a budget?
A financial plan of income and expenditure prepared in advance
What is a zero based budget?
A type of budget where each department is set a budget of nothing and must justify any requests for expenditure.
What is gross profit?
Profit after cost of sales has been deducted and before expenses.
What is liquidity?
how easily a company can convert its assets into cash.
What is business failure?
When a business is unable to continue to operate, which can be due to internal or external factors.
What is job production?
Production of a one-off item to meet the needs of an individual customer.
What is batch production?
Identical items are produced in small batches, using the same resources and passing through production at the same time.
What is flow production?
A production process where items flow along the production line in a continuous flow.
What is cell production?
A production process where the line is split into groups, each responsible for a certain area.
What is productivity?
A measure of output per unit of input in a given period of time, e.g., output per worker.
What is capital intensive production?
Production that uses a lot of capital when producing a good, e.g., machinery.
What is labour intensive production?
Production that uses a lot of labour when producing a good, e.g., workers.
What is capacity utilisation?
A measure of potential output that is being achieved, often a target for businesses.
What is over-utilisation?
When a firm operates above full capacity, ‘sweating its assets’.
What is stock control?
The method a business uses to maintain its level of stock, ensuring sufficient stock to meet demand while minimising costs.
What is lead time?
The amount of time between placing an order and receiving the item.
What is re-order level?
The level of stock that triggers an order for more to come in.
What is lean production?
A type of production that focuses on cutting waste while maintaining quality.
What is quality?
The ability of a good or service to meet customer expectations.
What is quality management?
The process in which a business meets customer expectations, e.g., implementation of quality control systems.
What is quality assurance?
A form of quality management that checks over a good or service at each stage of the process.
What is kaizen?
A quality management technique that focuses on small and frequent improvements in every aspect of the production process.
What is inflation?
A general rise in prices over a period of time or a fall in the power of money.
What does SPICED stand for?
Strong Pound makes Imports Cheaper but Exports Dearer. The acronym for what happens when a country is experiencing strong exchange rates.
What does WPIDEC stand for?
Weak Pound makes Imports Dearer but Exports Cheaper. The acronym for what happens when a country is experiencing weak exchange rates.
What is appreciation?
Term for an increase in the value of a currency.
What is depreciation?
Term for a decrease in the value of a currency.
What are interest rates?
The price of money, i.e., the cost of borrowing or the reward of saving.
What is taxation?
The process of imposing financial charges on businesses and individuals by the government.
What is government spending?
The annual expenditure used by the government to supply goods and services.
What is the business cycle?
Name this diagram.
What is a boom?
Stage of the business cycle characterized by high levels of economic activity.
What is a recession?
Stage of the business cycle where the rate of economic growth starts to fall, defined as two quarters of negative growth.
What is a slump?
Stage of the business cycle characterized by serious economic decline.
What is recovery?
Stage of the business cycle indicating signs that economic growth is rising.
What is economic uncertainty?
The inability to predict exactly what will happen in the economic environment.
What is legislation?
Laws created by the government to protect individuals and prevent consumer exploitation.
What are consumer protection laws?
Example of legislation that protects consumers regarding the quality of goods, e.g., sale of goods act.
What is employee protection?
Example of legislation that protects employees’ rights in the workplace.
What is health and safety legislation?
Example of legislation where employers are responsible for looking after their employees in the workplace.
What is a competitive environment?
The degree of competition in the market and the buying and selling power of consumers within it.
What is a monopoly?
When one firm dominates the market.
What is an oligopoly?
When a small number of firms dominate the market.
