what to revise Flashcards
Gearing Ratio Definition
Explores the capital structure of businesses by comparing the proportions of capital raised by debt and equity
Gearing Ratio Calc
Non current liabilities
——————————- x 100
Capital employed (current liabilities - total assets)
Power culture
Central source of power for decision making with few rules and procedures, hence it is a competitive environment generally found in small to medium sized businesses
Role culture
decisions made through rules which are give according to power. Tall hierarchy and long chain of command
Task culture
power to those who can accomplish tasks, teamwork is common
Person culture
many people but not much teamwork, sole purpose is to support
Mission statement
A bride statement describing its purpose and objectives in order to encapsulate its present operations
Corporate objectives
based off mission statement and its the objectives of the business as a whole
Porters Model of Generic strategies measures?
- the size of the market
- the source of competitive advantages
What are the area’s in Porters model of generic strategies called?
- Cost Leader
- Differentiation Leader
- Cost focus
- Differentiation focus
What does Ansoffs Matrix measure?
- Risk between products and markets
What are the area’s in Ansoffs Matrix called
- Market penetration (EM EP)
- Market development (NM EP)
- Product development (EM NP)
- Diversification (NM NP)
Porters five forces are?
- intensity of rivalry
- power of suppliers
- threats from substitutes
- power of customers
- threats of market entry
Time-series analysis (3 year)
add the first, second and third year then divide by three
Time-series analysis (4 year)
add the first, second, third and fourth year. Add the second, third, fourth and fifth year. Then subtract the first answer with the second, then divide by eight.
How do you calculate a variation?
actual sales - trend
What is simple payback?
The amount of time it takes for a project to recover the initial outlay.
What is the advantages of simple payback
- Useful for technological companies
- Simple to use
- Helps with cash flow
Disadvantages of simple payback
- Ignores profitability of investment
- cash earned after isn’t taken into consideration
What is ARR?
Profit (capital cost - net cash flow / years)
———————————————————– x 100
cost
measures the profit each year as a percentage of the capital cost of the investment
What are the advantages of ARR?
- shows profitability
- Rate of return can be compared
What are the disadvantages of ARR?
- Doesn’t take into account time value of money
- some allowance should be made for the time span over which the income from investment is received
What is NPV?
present values - initial cost
It takes into account the effects interest rates have on investment decisions
How do you calculate the expected value?
Multiply probable outcome then add result
how do you calculate the net gain
subtract the cost from expected value
What is a float
The time by which a task can be delayed without affecting the project
LFT - EST - duration
What is risk mitigation
Actions taken by a business to minimise or eliminate risk through a process of identification assessment and prioritising.
What are the forms of risk mitigation
- Business continuity
- Succession planning
- Contingency planning
What is contribution?
Price - variable cost per unit
What is the break even point
Break even = variable revenue (variable cost + fixed cost)
What is the breakeven output?
contribution
How do you improve utility?
- Outsourcing
- Redeployment
- increase sales
