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Flashcards

Edexcel Business a level theme 2 flashcards

James Pavier English 85 cards

Cards in this deck (85)

  1. 1INTERNAL FINANCE (2.1..1)INTERNAL FINANCE
    (2.1.1)
  2. 2What is Internal Finance (2.1.1)Money gained from within the business i.e.
    Retained Profit - profits reinvested
    Owners Capital - savings invested
    Sales of Assets - machinery and other assets sold
  3. 3What are the Pros and Cons of Internal Finance (2.1.1)Pros:
    Money is available immediately
    Not interest in involved
    Cons:
    Can be limited in terms of the amount as well as options present
  4. 4EXTERNAL FINANCE (2.1.2)EXTERNAL FINANCE
    (2.1.2)
  5. 5What is External Finance and name 3 examples. (2.1,2)Money gained from outside the business i.e.
    Bank loans - money on top of interest
    Business angels - investors who want an equity
    Crowd Funding - particularly used by charities.
  6. 6What are the Pros and Cons of External Finance (2.1.2)Pros:
    Assets can be kept for productivity
    Bigger Economies of Scale
    Cons:
    Interest is normally added
    Loss of ownership may occur
  7. 7LIABILITY (2.1.3)LIABILITY
    (2.1.3)
  8. 8What is Limited Liability (2.1.3)Where the owners of the company can only lose the money they invest
  9. 9What is Unlimited Liability (2.1.3)Where the owners of the company are liable for all debts made, meaning personal assets including property can be taken
  10. 10PLANNING (2.1.4)PLANNING
    (2.1.4)
  11. 11What is a Business Plan (2.1.4)A plan for the development of a business, giving details such as:
    Financial forecasts
    Premises and Equipment
    Personnel
  12. 12What is a Cash Flow Forecast (2.1.4)The prediction of all expected receipts and experiences of a business over a future time period which shows the expected cash balance at the end of each month.
  13. 13What are Cash Inflows (2.1.4)The flow of money into a business such as sales.
  14. 14What are Cash Outflows (2.1.4)The flow of money out of a business such as rent and wages.
  15. 15What is Net Cash Flow (2.1.4)The difference between the cash flowing into the business against the cash flowing out in a given time period.
  16. 16What is Solvency (2.1.4)The degree to which a business is able to meet the debts when they fall due.
  17. 17SALES FORECASTING (2.2.1)SALES FORECASTING
    (2.2.1)
  18. 18What is Sales Forecasting (2.2.1)The process of estimating future sales.
  19. 19What are the Pros of Sales Forecasting (2.2.1)Gives a company an insight into what they will need to meet or go further beyond their sales forecasts i.e.
    Staff
  20. 20What are the Cons of Sales Forecasting (2.2.1)A forecast is only a prediction, many factors may affect the company to not meeting their forecasts
  21. 21What are the Factors affecting sales forecasts (2.2.1)Consumer Trends
    External Shocks
    Economic Growth
    Inflation
  22. 22SALES, REVENUE AND COSTS (2.2.2)SALES, REVENUE AND COSTS
    (2.2.2)
  23. 23What is the formula for Sales Volume (2.2.2)Sales Revenue divided by Selling Price
  24. 24What is the formula for Sales Revenue (2.2.2)Price X Quantity of Output
  25. 25What is a Fixed Cost (2.2.2)Costs that never change i.e.
    Rent
  26. 26What is a Variable Cost (2.2.2)A cost that rises with output
  27. 27What is a semi-variable costA cost that consists of both fixed and variable elements.
  28. 28What is the 'total cost'The entire cost of producing a given level of output
  29. 29BREAKEVEN (2.2.3)BREAKEVEN
    (2.2.3)
  30. 30What is BreakevenWhen a business generates just enough revenue to cover its total costs
  31. 31What is Breakeven outputThe output a business needs to produce so that its total revenue and total costs are the same
  32. 32What is the breakeven pointThe point at which a company is making no profit or loss
  33. 33What is the formula for BreakevenFixed costs divided by contribution
  34. 34What is the formula for contributionSelling price - variable cost
  35. 35What is the margin of safetyThe range of output between the breakeven level and the current level of output, over which a profit is made.
  36. 36BUDGETS (2.2.4)BUDGETS
    (2.2.4)
  37. 37What is a budgetA financial plan for the future concerning the revenues and costs of a business.
  38. 38Name 3 purposes of a budgetControl
    Planning/ preparation
    Communication
  39. 39What is a zero-based budgetA system of budgeting where no money is allocated for costs or spending unless they can be justified by the fund holder.
  40. 40What is a varianceThe difference between actual financial outcomes and those budgeted
  41. 41What is variance analysisThe process of calculating variances and attempting to identify their causes.
  42. 42PROFIT (2.3.1)PROFIT
    (2.3.1)
  43. 43What are the three types of profitGross profit
    Operating profit
    Net Profit
  44. 44What is gross profit and what is the formulaThe difference between revenue/turnover and cost of sales
    Formula =
    Revenue divided turnover - cost of sales
  45. 45What is gross profit margin and what is the formulaGross profit expressed as a % of revenue/turnover
    Formula =
    Gross profit divided by revenue X 100
  46. 46What is operating profit and what is the formulaThe difference between gross profit and business overheads, such as selling.
    Formula =
    Gross profit - Operating expenses
  47. 47What is the operating profit margin and what is the formulaOperating profit expressed as a % of revenue/ turnover
    Formula =
    Operating profit divided by revenue X 100
  48. 48What is net profit and what is the formulaThe difference between operating profit and interest and exceptional items
    Formula =
    Operating profit - Interest
  49. 49What is net profit margin and what is the formulaNet profit after tax, expressed as a % of revenue/ turnover
    Formula =
    Net profit before tax divided by revenue X 100
  50. 50Name 2 ways in which a company can become more profitableRaising Prices
    Lowering costs through cheaper raw materials
  51. 51LIQUIDITY (2.3.2)LIQUIDITY
    (2.3.2)
  52. 52What is liquidityThe ease of which assets can be converted into cash
  53. 53What is Acid Test RatioCurrent Assets - stock divided by Current Liabilities
  54. 54What is current ratioCurrent Assets divided by current liabilities
  55. 55BUSINESS FAILURE (2.3.3)BUSINESS FAILURE
    (2.3.3)
  56. 56Name 3 internal causes of business failureOvertrading
    Seasonal Factors
    Poor Leadership
  57. 57Name 3 external causes of business failureCompetition
    Changing consumer tastes/ trends
    Changes in market prices
  58. 58PRODUCTION, PRODUCTIVITY AND EFFICIENCY (2.4.1)PRODUCTION, PRODUCTIVITY AND EFFICIENCY
    (2.4.1)
  59. 59What is batch productionA method that involves completing one operation at a time on all units before performing the next
  60. 60What is cell productionInvolves producing a family of products in a self - contained unit within a factory
  61. 61What is flow productionLarge scale production of a standard product, where each operation on a unit is performed continuously one after the other, usually on a production line
  62. 62What is job productionA method of production that involves employing all factors to complete one unit at a time
  63. 63What is lean productionAn approach to operations that focuses on the reduction of resource use
  64. 64Name 3 factors that affect productivityMotivation of employees
    Education and Training
    Specialisation
  65. 65Name 3 factors that affect efficiencyNew technology
    Outsourcing
    Kaizen
  66. 66What is KaizenA Japanese term for continuous improvement
  67. 67CAPACITY UTILISATION (2.4.2)CAPACITY UTILISATION
    (2.4.2)
  68. 68What is capacity utilisation and what is the formulaThe use that a business makes of its resources
    Formula =
    Current output divided by max. possible output X 100
  69. 69Name 2 ways in which capacity utilisation can be improvedIncrease Sales
    Reduce Capacity
  70. 70STOCK CONTROL (2.4.3)STOCK CONTROL
    (2.4.3)
  71. 71Name 3 factors that influence stock levelsDemand
    Type of stock
    External Shocks
  72. 72What are buffer stocksStocks held as a precaution to cope with unforeseen demand
  73. 73Name 3 implications of poor stock controlOpportunity cost
    Unsold stock
    Storage costs
  74. 74What is JIT stock control and name 1 pro and 1 conA stock control method where stock is ordered when it is needed.
    Pro: Storage costs are low
    Con: If demand booms then they cannot meet it
  75. 75QUALITY MANAGEMENT (2.4.4)QUALITY MANAGEMENT
    (2.4.4)
  76. 76What is quality controlMaking sure that the quality of a product meets specified quality performance criteria.
  77. 77What is Quality AssuranceA method of working for businesses that takes into account customers' wants when standardising quality.
  78. 78What is Total Quality ManagementTQM is a managerial approach that focuses on quality and aims to improve the effectiveness, flexibility and competiveness of the business
  79. 79LEGISLATION (2.5.2)LEGISLATION
    (2.5.2)
  80. 80Name 3 ways how consumer legislation affects businessesIncreased Costs
    Quality Control
    Changes in business practice
  81. 81Name 3 ways how employment legislation affects businessesIncreased labour costs
    Loss of flexibility
    Penalties
  82. 82Name 3 ways how environmental legislation affects businessesMarketing
    Finance
    HR
  83. 83THE COMPETITIVE ENVIRONMENT (2.5.3)THE COMPETITIVE ENVIRONMENT
    (2.5.3)
  84. 84Name 3 things that determine competitivenessNumber of businesses in a market
    Barriers to Entry
    Differentiation
  85. 85Name 3 ways that competitiveness can affect businessesPrice
    Profit
    Innovation

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A summary of the whole of theme 2 within 85 flashcards
Created by
James Pavier
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