3.5

Question 1

what is on a profit + loss account

Answer 1

-revenue
-cost of sales
-gross profit
-operating profit
-profit for the year (net profit)

Question 2

what is on a balance sheet

Answer 2

-current assets
-current liabilities
-invetories
-receivables + payables
-non current liabilities
-capital and reserves

Question 3

what are the limitations of ratio analysis

Answer 3

-one data set isnt enough
-how reliable is data
-based on past
-comparability

Question 4

what is ROCE

Answer 4

return on capital employed / primary ratio
what returns the business has made on the resources available to it

Question 5

how is roce calculated

Answer 5

operating profit
———————— x100
capital employed

Question 6

how is capital employed calculated

Answer 6

total equity + non current liabilities

Question 7

how are the profit margins calculated

Answer 7

type of profit
——————— x100
sales revenue

Question 8

how is working capital calculated

Answer 8

current assets - current liabilities

Question 9

how is current ratio calculated

Answer 9

current assets
———————
current liabilities

Question 10

how is acid test ratio calculated

Answer 10

current assets - stocks
———————————
current liabilities

Question 11

how do you analyse a roce percentage

Answer 11

higher % is better as more return is made on capital - more profitable - needs to be compared to previous years

Question 12

how is gross profit calculated

Answer 12

sales revenue - cost of sales

Question 13

how is operating profit calculated

Answer 13

gross profit - expenses

Question 14

how is net profit/ profit for the year calculated

Answer 14

operating profit - interest + exceptional items

Question 15

what is gearing

Answer 15

the proportion of a businesses finance that is provided by debt eg bank loan
how dependent a business is on borrowing money

Question 16

how is gearing calculated

Answer 16

non current liabilities
—————————— x100
capital employed

Question 17

what is considered high gearing

Answer 17

50%+

Question 18

what is a low gearing

Answer 18

25%-

Question 19

benefits of high gearing?

Answer 19

-less capital required from shareholders as it can be accessed quickly from bank
-debt can be cheap source of finance compared to dividends
-easy to pay back w interest if strong profit and cash flow

Question 20

benefits of low gearing?

Answer 20

-less risk of defaulting on debts
-shareholders rather than debt providers make decisions
-business has capacity to add debt if needed

Question 21

how can a business reduce gearing

Answer 21

-increase sales/ cut costs to increase profit or pay off debt
-issue more shares

Question 22

what is employee retention

Answer 22

the ability of a business to convince employees to remain within a business

Question 23

what is labour turnover

Answer 23

the percentage of staff that leave a business within a given period

Question 24

how is labour turnover calculated

Answer 24

number of employees leaving in period
——————————————————— x100
average number employed in period

Question 25

what factors affect staff turnover

Answer 25

-not paid enough -poor working conditions -local vacancies arise -not enough promotion opportunities -bullying/harassment -poor management - demotivation -poor communication -poor recruitment and selection -poor economic conditions -seasonal/temporary staff

Question 26

what are the problems of high staff turnover

Answer 26

-high costs - increased recruitment and training costs -increased pressure on remaining staff -disruption to productivity -harder to maintain quality and customer service

Question 27

how can staff turnover be improved

Answer 27

-effective recruitment and training -provide competitive pay and incentives -job enrichment -reward staff loyalty

Question 28

what is labour productivity

Answer 28

output per worker

Question 29

how is labour productivity calculated

Answer 29

output per period ——————————————— number of employees working

Question 30

what factors influence labour productivity

Answer 30

-extent and quality of fixed assets -skills ability and motivation of workforce -extent to which the workforce is trained and supported -external factors eg suppliers

Question 31

how can labour productivity be improved

Answer 31

-measure performance + set targets -streamline production processes - reduce unnecessary workload -employee training investment -improve working conditions

Question 32

what problems could arise when increasing labour productivity

Answer 32

-potential trade off with quality -employee resistance -employees may want higher pay

Question 33

what is absenteeism

Answer 33

an employees intentional or habitual absence from work

Question 34

why is absenteeism an issue

Answer 34

-increases costs -key to understand reasons - often predictable if not geniine

Question 35

how is absenteeism calculated

Answer 35

number of staff absent in period ———————————————— x100 number of staff employed in period OR number of days taken off in period ———————————————————- x100 total days worked by workforce (employees x days possible)

Question 35

how can absenteeism be tackled

Answer 35

-understand causes -set targets + monitor trends -have clear sickness + absence policy -reward good attendance -consider wider issue of employee motivation

Question 36

what theorist is linked to financial motivation

Answer 36

taylor

Question 37

what theorist is linked to empowerment motivation

Answer 37

herzberg

Question 38

how can staff be motivated to improve attendance/ productivity/ retention

Answer 38

-financial rewards - but expensive -empowerment - must be trustworthy/reliable -staff share ownership scheme - expensive -consultation (part of decision making) - costly and slow