A Level Business > Core Knowledge > Flashcards

Core Knowledge Flashcards

(67 cards)

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1
Q

Give the core price elasticity LOA (10)

A
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2
Q

Give the core price inelastic LOA (8)

A

I

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3
Q

Give the core balance sheet/ liquidity LOA (7)

A
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4
Q

Give the core purchasing EOS LOA (9)

A
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5
Q

Give the core marketing EOS LOA (11)

A
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6
Q

Give the core YED elastic LOA (4)

A
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7
Q

Give the core YED inelastic LOA (5)

A
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8
Q

What does price elastic mean?

A

Customers are sensitive to a change in price

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9
Q

What does price inelastic mean?

A

Customers are insensitive to a change in price

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10
Q

What factors may affect PED?

A

-competition
-ethics
-innovation
-publicity
-customer support
-durability
-fashion status

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11
Q

What is the equation for calculating PED?

A

% change in demand
——————————
% change in price

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12
Q

Give the LOA for price elastic (6)

A
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13
Q

How do you interpret PED?

A

-PED is always negative so focus on the numerical value and not the minus sign
- if the PED value is greater than 1, the product is price elastic
-if the PED value is less than 1, the product is price inelastic

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14
Q

Give a LOA for differentiation (6)

A
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15
Q

Give the equation for calculating YED

A

% change in quantity demand
——————————————
% change in income

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16
Q

How do you remember the calculation for PED?

A

Ducks in a pond

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17
Q

How do you remember the calculation for YED?

A

Ducks on ice

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18
Q

Give the LOA for luxury goods (7)

A
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19
Q

Give the LOA for normal goods (6)

A
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20
Q

Give the LOA for inferior goods (5)

A
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21
Q

Give the LOA for the benefit of spreading risk (8)

A
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22
Q

Give the LOA for a drawback of spreading risk (8)

A
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23
Q

What are economies of scale?

A

The reduction in average costs as the output rises

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24
Q

How do you work out unit fixed costs?

A

Total fixed cost
———————— = unit fixed costs
Number of units

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25
How do you work out unit variable costs?
The cost to make one unit - the raw material cost
26
How do you work out unit costs/ average unit?
Total VC + Total FC —————————- Total number of units
27
Give the LOA for purchasing EOS (5)
28
What are some fixed marketing costs?
Market research Research and Development Advertising
29
Give the LOA for marketing EOS (7)
30
What is purchasing EOS?
Variable costs fall as output rises
31
What is marketing EOS?
Fixed costs are spread over more units so there is a lower unit fixed cost
32
What is financial EOS?
If a business has more, large scale assets they can obtain a bank loan more easily as their property can be seen as collateral
33
Give the LOA for financial EOS (6)
34
What is technical EOS?
Larger organisations have larger/ more efficient machinery so have more efficient production methods
35
Give the LOA for technical EOS (5)
36
Draw a table to show Porters generic strategies
37
Describe differentiation according to Porter
-gaining a competitive advantage by creating an innovative product that is different to the rest of the market and stand out
38
Describe differentiation focus according to Porter
-gaining a competitive advantage by choosing to avoid competing in the mass market by targeting a smaller segment then highly differentiating to meet the needs of this smaller segment
39
Describe cost leadership according to Porter
-gaining a competitive advantage through taking steps to minimising costs as much as possible. through doing this they can sell their products at a lower price than competitors so can gain a competitive advantage
40
Describe cost focus according to Porter
-gaining a competitive advantage through targeting a smaller segment segment and focusing on reducing costs within this market. this can be done through specialising producing one product as efficiently as possible.
41
Give the LOA for porters differentiation strategies (7)
42
Give the LOAs for cost leadership/cost focus
43
Write out the income statement (10)
1. Sales revenue 2. Cost of sales 3. Gross profit 4. Expenses 5. Operating profit 6. Exceptional items 7. Tax 8. Net profit 9. Retained profit 10. Dividends
44
What is net assets the same as?
Total equity
45
What are current liabilities?
Money the business owes that must be repaid within 12 months
46
How do you work out working capital?
Current assets - current liabilities
47
What are non current liabilities?
Don’t need to be repaid for at least 12 months (long term debts)
48
How do you work out net assets?
Total assets - total liabilities
49
How do you work out total assets?
Current assets + non current assets
50
How do you work out total liabilities?
Current liabilities + non current liabilities
51
What are liquid assets?
-stock -receivables (money owed by customers) -easily turned to cash
52
What are non liquid assets?
-store -factory -machinery
53
Why do businesses need good liquidity?
Need to have enough cash as possible to pay the bills. The more cash of assets that are likely turn to cash then the more likely the business is do be able to pay the debt .
54
What happens if a business runs out of cash?
1. The business can no longer pay bills and owe money to banks, suppliers or utility companies 2. They are forced by the courts to sell assets to cover the amount they owe such as land, machinery and vehicles 3. The value of what they sell is used to pay off their debts but as they have sold so much they can no longer operate
55
How can liquidity be calculated?
Working capital Current ratio Acid test ratio
56
What is the formula for working capital? *
Current assets - current liabilities
57
What is the formula for current ratio?
Current assets ———————— Current liabilities
58
What is a good current ratio?
1.5-3
59
What is a current ratio that is too low?
Below 1.5 or 1
60
What is a current ratio that is too high?
Above 3
61
What is the equation for acid test ratio?
Current assets - stock ——————————- Current liabilities
62
What is a good acid test ratio?
Above 1
63
What is an acid test ratio that is too low?
Less than 1 or 0.75
64
What is an acid test ratio that is too high?
Above 2
65
Compare liquidity and profitability (5)
66
Give the LOA for high liquidity (6)
67
Give the LOA for low liquidity (6)
A Level Business
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