What is a balance sheet?
A snapshot of a business’s finances at a fixed point in time
What is on a balance sheet?
The value of all the business’s assets, liabilities and of all capital and its source
What three elements make up current assets?
Inventories, trade and other receivables, cash and other current balances
What four elements make up non-current assets?
Land and buildings, vehicles, plant and machinery, intangible assets
What four elements make up current liabilities?
Overdrafts, trade and other payables, dividends, unpaid tax
What element makes up non-current liabilities?
Payments due in over a year
What is the formula for net assets?
(Current assets + non-current assets) - (current liabilities + non-current liabilities)
What are bad debts?
Debts that are not paid by the debtor so must be written off and noted as an expense on the profit and loss account
What is working capital?
The amount of cash (and assets that can easily be turned into cash) that the business has available to pay its day-to-day debts
What is the formula for working capital?
Current assets - current liabilities
(same as net current assets)
What are three factors that impact how much cash is needed?
Length of the cash flow cycle, inflation, expansion
What is fixed capital?
Money used to buy non-current assets which are used over and over again
What are three uses of fixed capital?
To start up, to grow, to replace worn out equipment
What happens if the business has too much stock?
Money is tied up and not working for the company
What is net realisable value?
The amount the company could get by selling the stock in its current state
What can impact realisable value?
Changing demand
What is depreciation?
The loss in value of a tangible asset over time, which is recorded as an expense on the income statement
What are three reasons for depreciation?
Wear and tear, breaking down, becoming out of date
What is an income statement?
Shows how much money has been coming into the business and how much has been going out
What does low gross profit need?
Reduced costs, increased selling price
What does low operating profit need?
Reduced operating expenses
What is the formula for profit before tax?
Operating profit - other expenses
What does profit before tax show?
Whether income or expenses are coming from other activities rather than normal activities
What is the formula for retained profit?
Profit after tax - dividends
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Mission, Objectives and Strategy20
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Operational Decision Examples3
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Example Businesses7
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Internal Analysis49
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What is Business?51
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Management and Decision Making42
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Marketing Decisions89
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Analysing the External Environment87
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Examples1
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Operational Decisions56
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Financial Decisions68
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Examples: Analysing the External Environment6
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Human Resource Decisions79
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Strategic Methods42
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Investment Appraisal15
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3.9 Definitions32
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3.763
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3.1019
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3.815
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Standard Chains of Analysis5
