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Business > Theme two - stuff idk > Flashcards

Theme two - stuff idk Flashcards

1
Q

What is a business plan?

A

A document setting out a business idea and showing how it is to be financed, marketed and put into practice.

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2
Q

What is a cash flow forecast?

A

Estimating future monthly cash inflows and outflows, to find the net cash flow.

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3
Q

What is just in time stock control?

A

Ordering stock so that it arrives just before it is needed, just in time. Operates with a zero buffer stock.

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4
Q

How do you calculate break even?

A

Fixed costs
Divided by
selling price per unit - variable cost per unit
or contribution per unit.

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5
Q

What is the margin of safety and how do you calculate it?

A

The amount by which current output exceeds the level of output necessary to break-even.
Actual sales - break even point

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6
Q

What factors can change the break even and margin of safety points?

A

Revenue increase - BE decreases and MoS increases.
Cost increase - BE increase and MoS decreases.

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7
Q

What is contribution?

A

It is total revenue less variable cost. Useful for businesses that are responsible for a wide range of products.

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8
Q

What is a budget?

A

A target for costs or revenue that a firm or department must aim to reach over a given period of time. An income budget sets a minimum target while an expenditure budget sets a maximum.

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9
Q

Why is budgeting used?

A

To ensure that no department or individual spends more than the company expects.
To enable spending power to be delegated to local managers who will know better.
To motivate staff - they know what they must achieve to be successful.
To provide a yardstick against which a manager’s success or failure can be measures.

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10
Q

What is adverse variance?

A

A difference between budgeted and actual figures that is damaging to the firm’s profit e.g. costs up or revenue down.

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11
Q

What is favourable variance?

A

A difference between budgeted and actual sales that boost a firm’s profit e.g. revenue up or costs down.

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12
Q

How do you calculate gross profit?

A

Revenue - cost of sales

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13
Q

How do you calculate gross profit margin?

A

Gross profit divided by sales revenue
multiplied by 100

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14
Q

How do you calculate operating profit?

A

Gross profit - fixed overheads

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15
Q

How do you calculate operating profit margin?

A

Operating profit divided by sales revenue
multiplied by 100

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16
Q

How do you calculate net profit margin?

A

Profit for the year divided by sales revenue
multiplied by 100

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17
Q

What is corporation tax?

A

A levy on the income of companies, i.e. you pay a percentage of your pre-tax profit.

18
Q

What are fixed overheads?

A

The indirect costs that have to be paid however the business is performing, e.g. rent and salaries.

19
Q

What does liquidity mean?

A

The ability of a firm to find the cash to pay its bills.

20
Q

How do you calculate current ratio?

A

Current assets divided by current liabilities.

21
Q

How do you calculate acid test ratio?

A

(current assets - inventories)
Divided by current liabilities.

22
Q

How could a business improve liquidity?

A

Selling under-used fixed assets.
Raising more share capital.
Increasing long-term borrowings.
Postponing planned investments.

23
Q

What is contingency finance?

A

Planning for the unexpected by either keeping a cash cushion in the firm’s current account or keeping an overdraft facility little-used.

24
Q

What is working capital cycle?

A

How long it takes for a complete cycle from cash out (buying stock) to cash back in from a customer payment. It could vary from one day to one year.

25
Q

What is administration?

A

When the directors of a business feel forced by the threat of insolvency to hand over management control to an administrator (usually to an accountant), who may try to sell the business, or perhaps close it down and sell off the assets.

26
Q

What is a business model?

A

The underlying plan of how the business is going to make a profit in the long term.

27
Q

What is resource management?

A

Planning and control at every stage in the supply chain, from purchasing to customer delivery.

28
Q

What is batch production?

A

Producing a set number of identical items.

29
Q

What is job production?

A

Producing a one off item for a one off customer.

30
Q

What is flow production?

A

This is the continuous production of a single item.

31
Q

What is cell production?

A

Setting up a small production line or group-working process so that items can be produced quite flexibly.

32
Q

What is the productivity formula?

A

Outputs divided by inputs per time period.

33
Q

What is lean production?

A

Focusing on minimising wastage of resources throughout the supply process, e.g. minimum stock levels and minimum wastage through poor quality.

34
Q

What is capacity utilisation?

A

Measures a firm’s output level as a percentage of the firm’s maximum output level.

35
Q

What is the formula of capacity utilisation?

A

Current output divided by max possible output.
Multiplied by 100.

36
Q

What is subcontracting?

A

Where another business is used to perform or supply certain aspects of a firm’s operations.

37
Q

What is a trade-off?

A

Accepting less of one thing to achieve more of another, e.g. slightly lower quality in exchange for cheapness.

38
Q

What is a recession?

A

Two or more quarters of negative economic growth.

39
Q

What are the five main areas in which legislation affects?

A

Consumer protection.
Employee protection.
Environmental protection.
Competition policy.
Health and safety.

40
Q

What is a cartel?

A

An agreement between producers to control supply and thereby control prices. This is illegal, but not unusual.

Business (5 decks)

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