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Flashcards

Internal analyse

William Holcroft Business Studies A level English 64 cards

Example of a balance sheet (picture)

Cards in this deck (64)

  1. 1What is a mission statementit sets ut a business's overall purpose to direct and stimulate the entire organization.
    they focus on:
    -what the business wants to be
    -the values of the business
    -the range of the firm's attitude
    the importance of different groups
  2. 2What is a vision statementIt sets out a business's aspirations for the future
  3. 3What are the corporate objectives?they are medium to long term goals established to coordinate the business
  4. 4What are strategic decisonsThey are a judgment made by senior managers that are longer, involves a major commitment of resources and are difficult to reserve
  5. 5Examples of coporate objectives-Market Position
    -Innovation
    -Financial resources
    -Physical resources
    -Human resources
    Productivity
    -Social responsbility
    -Profits
  6. 6What is short termismit is the pressure to deliver quick result to the potential detriment of the longer term development of a company
  7. 7What are functional decisionsA functional decision is a judgment taken by managers responsible for one aspect of a business's activities such as marketing or human resources
  8. 8What is SWOT analysis?Stands for:
    S= Strengths
    W=Weaknesses
    O=Oppotunity
    T=Threat
    Is a management technique used to identify business strengths and weaknesses as well as the opportunities and threats to which it will be exposed
  9. 9Benefits of SWOT analyse-is a low cost and straightforward technique
    -can assist managers to think in a structured way and focus on the internal and external features of the business
    -helps develop plans that are logical in the context of the business's current position
  10. 10Drawbacks of SWAT analyzeIt can be difficult to address uncertain or two-sided factors
    - A lot of info but it is unlikely to offer any solutions
    -No assistance to manager in judging the relative importance of SWOT
    - Data need to be accurate and reliable
  11. 11What is a balance sheet?it is a financial statement recording the assets and liabilities of a business on a particular ay at the end of an accounting period. The balance sheet represents a picture of a businesses assests and liabilities at a particular moment in time
  12. 12What are assets and different typesAssets are items owned by the business, such as cash in the bank, vehicles and property
    Non-current assets- retain for a year or more
    Current assets- assets that et converted into cash before a year has passed
    Tangible assests- physical exsence. e,g. land, property and machines
    Intangible assest- no physical form. e.g. Patents, Loans and morgages and brand
  13. 13What is a liability and typesrepresents money owed by the business to individuals, suppliers, financial institutions and shareholders
    Current- short term payment, less than a year
    Non current- Payments that are more than one year e.g morgage
    Total equity- money invested into the business by owners/ shareholders
  14. 14Equation of net assetsTotal assets - Total liabilities
  15. 15Example of a balance sheet (picture)Example of a balance sheet (picture)
  16. 16What is working capitalIt measures the amount of money a business has to pay day to day expenses
    Equation: current assests- current liabilities
  17. 17Factors that influence amount for working capital-the volume of sales- higher level of sales lead to more expentuures like wages adn fuel
    The amount of trade credit offered by a business- shorter trade credit in order ot have more working capital
    Growth of firm- the bigger the firm the more requirments and more expenditure
    Length of operating cycle
    the reate of inflation
  18. 18What is depreciationis the reduction of the value of an asset over a period of time
  19. 19Why to assets decline in value-as a result of wear an tear
    More mordern equipment coming out
    -repairs of equipment devalues it
  20. 20What is an income statementis an accounting stament showing a frims slaes revenue over a trading period and all revelant costs generated to earn that revenue
  21. 21Difference between high quality profit and low quality profitLow quality profit is short term profit, so e.g a one- off profit
    High quality a longer term profit, so a pridict that will generate profit for a long period of time is called a high quality profit
  22. 22Stage of structuring income statemetntStage of structuring income statemetnt
  23. 23Define profitabilityis a measure of financial performance that compares a business's profit to some other factors such as capital employed or revenue
  24. 24What is a profit marginis a ratio that expresses a businesses profit as a percentage of its revenue over a trading period
  25. 25Return on capital employed (ROCE)profitability ratio that measures how efficiently a company can generate profits from its capital employed by comparing net operating profit to capital employed
    operating profit x 100/ capital employed (total equity + non - current liabilities)
  26. 26Current ratioThis measures the ability of a business to meet its liabilities or debts over the next year or so
    Current ratio= current assets/current liabilities
  27. 27What is gearingit measures long term liquidity of a business.
    Gearing= non-current liabilties x 100/ capital employed ( total equity + non-current liabilties)
  28. 28Inventory turnover ratiomeasures a company's success in converting inventories into sales
    Inventory turnover ratio= cost of goods sold/ average inventories held
  29. 29Receivable DaysThis ratio calculates the time taken by a business to collect the money that is owed
    Receivables x 365/ revenue
  30. 30Payables daysThis ratio calculates the time taken by a business to pay the money it owes
    payables x365/ cost of sales
  31. 31values is ratio analysis in assessing performanceThe results of the business in previous years- this allows stakeholders to appreciate the trend of the data
    The result of the ratio analysis for other firms in the industry- depends on the business, business with perishable products will have a higher inventory turnover ratio
    The results of ratios from firms in other industries- stakeholder may compare the ratios of a particular business with those from a wide range of businesses
  32. 32limitations is ratio analysis in assessing performanceThe market in which the business is trading- a highly competitive market will have a lower return on capital employed
    The position in the market- bigger firms will have a bigger return than a smaller business
    The quality of the workforce- if a firm invests heavily in workforce returns will be lower
    The economic environment- business will perfomr better if there is a stronger economy
  33. 33Three main aspects of operations dataThe productivity of labor- measures the number of inputs required to produce a unit of output
    Quality- measure the extent to which a produvt mets customers requiremetns
    Capacity utlisation- measures the extent to which a business uses the resources available to it
  34. 34Aspects of Human resource data-labour productivity
    -absenteeism rates
    health and safety data
    labour costs per unit
    costs linked to workers e.g wages
    labour turnover and rentention
  35. 35Aspects of marketing dataThe detail on its product range- including the future forecast of its sales
    Market research
    Info about marketing activities including product deveoplment and its marketing budget
  36. 36ASpects Environmental dataEmmsions to air
    Emissions to water
    Emissions to land
    Use of scare and non-renewable resources
  37. 37What are core compentenciesthey are the unique abilities that a business processes that provide it with competitive advantages
  38. 38What is a compeitive advantageis a superiroty that a business processes over its rivals that may allow it to achieve objectives, such as increased market share or profitability
  39. 39Criticisms of research and developmentOutsourcing can interupthte core competences as those bsuiness will hae different cultures and objectives to host business.
    This thoery can be seen as out of date, as technology is growing business may need to focus on this more for exmaple
  40. 40What is research and developmentis the generation and application of scientific knowledge tocreate a new product or develop a new prodcution process whch ca nincrease the businesss productive effeicency
  41. 41What is profit qualitymeasure the extent to which a particular type of profit is sustainable
  42. 42What is employees engagementit describes the connection between a business's employees and its mission, goals and objectives
  43. 43What is a branda name , sign , symbol or design use to differentiate a good or service from those supplied by competitors
  44. 44Kaplan and Nortons balanced scorecardis the planning and managment straegy desgned to match business activities to the aspirations set out in the organisation's vision statement
  45. 45What he areas of measurement in hte balance scorecard-Financial performance
    Customer value performance
    Interal business proces performance
    Learning and growth performance
  46. 46The use of Kaplan and Norton scorecardThe use of Kaplan and Norton scorecard
  47. 47What is Elkingtons triple bottom line?A theory that was made by John Elkington in 1997. The theory has three components:
    Profit
    People
    Planet
  48. 48What is Fair Tradeis a social movement that exists to promote impove trading terms anad living conditions for producer of product in LEDC's
  49. 49TPL- Profitwhen considering profit as part of a triple bottom line , the idea its that profits will help sustain the broader communtity in which the business operates
  50. 50TPL-Peoplemeasures the impact that a business activities may have on all people with which it is involved
  51. 51TBL- Planetmeasuring the activity to seek to minimise the impact of their activities on the environment
  52. 52What is investment apprasialis a series of techniques designed to assit businesses in judgeing the desirability of investing in particular projects
  53. 53Different investment appraisal tecniques-Payback
    ARR (average rate of return)
    NPV (Net present value)
  54. 54What is payback?It is a simple technique that measures the time period required for the earnings from investment to recoup his original costs.
  55. 55example of a payback tableexample of a payback table
  56. 56What is average rate of returnIt calculates the annual percentage rate of return on each possible investment
  57. 57How to calculate ARRARR= average annual profit x100/ assest inital cost
    Average annual profit=total net profit before tax over assets lifetime/ useful life of an asset in years
  58. 58Example of an average rate of return questionExample of an average rate of return question
  59. 59What is Net present valueis the value of a future stream of income to reflect the opportunity cost of an investment
  60. 60There are two major reasons why this time value principles exist?Risk
    Opportunity Costs
  61. 61What is discountingIt is a process of adjusting the value of money received at some future date to its present value, that is its worth today
  62. 62What do we need to calculate NPV-initial cost of investment
    -the chosen rate of discount
    any expected inflows and outflows of cash
    -duration of investment project
    any remaining or residual of the project at the end of the investment
  63. 63Example of NPV tableExample of NPV table
  64. 64Comparisons of investment appraisal techniquesComparisons of investment appraisal techniques

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A level Business Studies Flashcards on Internal analyse , created by William Holcroft on 18/02/2019.
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