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A-Level Business Edexcel > Theme 2: Managing business activities > Flashcards

Theme 2: Managing business activities Flashcards

1
Q

retained profit

A

profit that has been generated in previous years and are reinvested back into the business

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2
Q

business angels

A

individuals who specialise in making investments in start-up or expanding businesses

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3
Q

crowdfunding

A

finance provided by a large number of small investors on online platforms

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4
Q

loan

A

a sum of money that is borrowed and repaid with interest

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5
Q

overdraft

A

an agreement for a business to spend more than what they have in their account

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6
Q

share capital

A

finance raised from selling shares

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7
Q

venture capital

A

funds provided by specialist investors to businesses that have potential for growth

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8
Q

leasing

A

when a business has use of an asset, such as machinery or a vehicle, in return for regular payments

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9
Q

trade credit

A

agreement made with suppliers to buy resources which are paid for at a later date

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10
Q

liability

A

a debt a business has to pay

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11
Q

limited liability

A

assets of the owner are considered to be separate from the firm’s assets

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12
Q

unlimited liability

A

owners are fully responsible for all debts owed by the business

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13
Q

business plan

A

a written document that provides a forecast of items including sales, costs and cash flow

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14
Q

cash flow forecast

A

a prediction of anticipated cash inflows and outflows

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15
Q

sales forecast

A

prediction of future revenue

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16
Q

sales volume

A

number of units sold

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17
Q

sales revenue

A

value of all units sold

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18
Q

sales revenue formula

A

sales revenue = selling price x quantity sold

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19
Q

fixed costs

A

costs that do not change as the level of output changes

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20
Q

variable costs

A

costs that vary depending on the level of output

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21
Q

break-even

A

the level of output where total revenue is equal to total costs

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22
Q

break-even formula

A

break-even point = fixed costs ÷ contribution per unit

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23
Q

contribution per unit formula

A

contribution per unit = selling price - variable costs per unit

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24
Q

margin of safety

A

difference between actual level of output and the break-even level of output

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25
budget
a financial plan a business sets about costs and revenue
26
historical budget
a budget based on previous financial figures
27
zero based budget
creating a new budget by justifying all expenses first
28
variance analysis
shows the difference between the budgeted figure and the actual figure achieved
29
favourable variance
when the actual figure achieved is better than the budgeted figure
30
adverse variance
when the actual figure achieved is worse than the budgeted figure
31
income statement
measures the profitability of a business over a period of time
32
gross profit
difference between revenue and the costs directly related to production (revenue - cost of sales)
33
operating profit
difference between gross profit and the indirect expenses involved in operating the business
34
profit for the year (net profit)
difference between operating profit and any interest paid and received plus any one off costs
35
profit formula
profit = total revenue - total costs
36
profit margin
the amount by which the sales revenue exceeds the costs
37
gross/operating/net profit margin formula
(gross/operating/net profit ÷ revenue) x 100
38
balance sheet
shows the financial position of a business at a specific point in time
39
liquidity
ability of a business to pay its liabilities with its available assets
40
current ratio formula
current assets ÷ current liabilities
41
acid test ratio
(current assets - inventory) ÷ current liabilities
42
working capital
the money a business has to fund its day to day activities
43
production
the transformation of resources into finished goods or services
44
job production
producing one unit at a time specific to the customer's needs and wants
45
batch production
producing groups of the same product before moving on to a group of different products
46
flow production
involves the continuous manufacturing of standardised products
47
cell production
workers are organised into teams with different responsibilities for a particular part of the production process
48
labour/capital productivity
measures the output per worker/machine over a period of time
49
labour/capital productivity formula
output ÷ number of workers/machines
50
efficiency
refers to the ability of a business to use its resources as cost-effectively as possible to produce output
51
average cost per unit formula
average cost = total costs ÷ number of units
52
labour intensive
when a business predominantly uses physical labour in the production process
53
capital intensive
when a business predominantly uses machinery and technology in the production process
54
capacity utilisation
measures how effectively a business uses its assets to produce output
55
capacity utilisation formula
(current output ÷ maximum potential output) x 100
56
lead time
the length of time from the point of stock being ordered from the supplier to it being delivered
57
buffer stocks
a quantity of goods or raw materials kept in case of stock shortages
58
just in time (JIT) stock management
involves ordering raw materials only when required to be delivered just before the production process
59
lean production
involves the minimisation of resources used in production
60
quality
considers the features and characteristics of a product that satisfy customer needs and wants
61
quality control
inspecting the quality of output at the end of the production process
62
quality assurance
inspecting the quality of production throughout the production process
63
quality circles
where groups of workers meet regularly to solve quality problems
64
total quality management (TQM)
the continuous elimination of manufacturing errors by ensuring that the products are checked for quality at every stage of production
65
continuous improvement (kaizen)
a business taking continuous steps to improve productivity through the elimination of all types of waste in production

A-Level Business Edexcel (2 decks)

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