Flashcards
BS Section 6 (2nd half)
Flashcards do conjunto (16)
- 1Why would SOA want to buy additionalo stock?Demand for products during this time will increase
This will also avoid situations of stockout which can result in lost sales - 2Why may there not be additional demand for SOA's products?- 22 other specialist retailers will be present
- They can sell their products at cheaper prices - 3Why may customers still buy from SOA?Price is not the only factor a customer will take into account.
Quality of SOA's outdoor pursuits gear may be greater so people may be willing to pay a higher price. - 4Why is there a problem in how SOA will fund the buying of additional stock?Finance should come from additional sales but there will be a period of cash shortfall as the money from sales take some time to come through.
- 5Give two examples of short-term sources of finance to fill the gap.Trade credit and overdraft.
- 6Give a description of trade credit.Securing an interest free period in which to pay for goods / services received. The typical credit period is between 30 to 70 days.
- 7Give a description of an overdraft.Arrangements between a firm and its bank / building society to withdraw more money from its account than that deposited in it, up to an agreed limit.
- 8What are the advantages and disadvantages of 'trade credit'?ADV: It is interest free
DIS: you may not be able to receive a discount for prompt payment - 9What are the advantages of an 'overdraft'?ADV: It is simple quick and easy to arrange
ADV: It is flexible and convenient
ADV: It may be a good short-term source of finance as interest is charged daily - 10What are the disadvantages of an 'overdraft'?DIS: Costs increase because of interest payment
DIS: Expensive if used regularly and for large payments
DIS: Overdraft facility can be withdrawn without notice. - 11What are the advantages of buying additional stock?SOA can access discounts for buying in a larger quantity (economies of scale)
This will allow SOA a greater profit margin if sales also increase. - 12What is the first of the five costs associated with holding stock?1. Cost of storage - e.g. purchase/ rent storage capacity, labour (security), Insurance (against fire)
- 13What is the second of the five costs associated with holding stock?2. Cost of finance - temporary source of finance may have to be used, e.g. bank loan
- 14What is the third of the five costs associated with holding stock?3. Theft, damage etc. - if employees know there is a lot of additional stock, they may take less care when handling items
- 15What is the fourth of the five costs associated with holding stock?4. If additional stock is not sold, it may become obsolete, outdated and unfashionable
- 16What is the fifth of the five costs associated with holding stock?5. Opportunity cost - money tied up in stock cannot be released until stock is paid for
The money used to but this additional stock could have been used to buy something else
Informações
- Descrição
- Year 11 Business Studies FlashCards sobre BS Section 6 (2nd half), criado por Humza Mahmood em 28-03-2017.
- Criado por
- Humza Mahmood
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