A Level Business > Unit 7 (B Class) > Flashcards

Unit 7 (B Class) Flashcards

(81 cards)

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1
Q

what is a mission statement

A

a qualitative statement of a business overall purpose and focus

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2
Q

what is a corporate objective

A

objectives of the business as a whole e.g profit survival

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3
Q

what are functional objectives

A

objectives specific to departments e.g HR, finance, operations and marketing

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4
Q

what is meant by the term strategy

A

a plan set in place to achieve certain goals
a medium to long term plan to achieve an objective

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5
Q

what is a tactic

A

a tactic is a short term actions to support a strategy e.g 1 week social media campaign on product launch

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6
Q

what are they key internal factors influencing corporate objectives

A

investors, employee morale, managers mentality, size of business, financial situation

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7
Q

what are the key external factors influencing corporate objectives

A

The economy, suppliers, government legislation, local community, environmental factors, PESTLE, shareholders and CEOs

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8
Q

what is meant by short termism

A

this means focusing on immediate results or profit at the expense of long term success and sustainability
the business prioritises quick gain rather than future growth

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9
Q

what is a balance sheet

A

a balance sheet shows the value of a business on a particular date. a balance sheet shows what a business owns and owes

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10
Q

what is an income statement

A

formal financial document that summarises a business trading activities and expenses to show whether a profit or loss has been made over a specific period of time (usually 1 year)

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11
Q

what is capital employed

A

funding being used

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12
Q

what are the 4 categories of financial ratio

A

Liquidity, Gearing, Profitability, Efficiency

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13
Q

what are non current assets

A

business wants to keep more than year

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14
Q

what are current assets

A

likely to be turned into cash within a year

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15
Q

what are current liabilities

A

debts need to be paid within a year

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16
Q

what are non current liabilities

A

debts owed that they have years to pay off

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17
Q

what is the formula for net assets

A

assets - liabilities

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18
Q

what is total equity

A

total funding within the business

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19
Q

what is revenue

A

total income generated by sales of goods and services

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20
Q

what is cost of sales

A

cost involved in directly producing goods or services you sell

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21
Q

what is operating expenses

A

an expense that a business incurs through its normal business operations

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22
Q

what is the formula for profit for the year

A

operating profit - financial costs

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23
Q

what is the formula for all profit margins

A

profit / revenue x 100

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24
Q

what do profit margins help us understand

A

how much profit is being made from buying and selling goods
the higher the better

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25
if a gross profit margin is low or falling it may indicate
cost of sales is too high sales are in a decline
26
what does operating profit margin measure
measure of a firms profitability by looking relationship between operating profit and revenue
27
if an operating profit is low or falling it may indicate
they aren't managing expenses efficiently sales are in a decline
28
what is the ideal ratio
2:1
29
what is the formula for current ratio
current assets/current liabilities
30
what is the formula for gearing ratio
non current liabilities/total equity add non current liabilities x 100
31
what does current ratio show
demonstrates business ability to pay debts from assets short term
32
what does gearing ratio show
measures the proportion of business capital provided by debt
33
what is the formula for return on capital employed
operating profit / total equity add non current liabilities x 100
34
what does return on capital employed (ROCE) measure
measures how efficiently profit is generated from equity
35
what is the formula for inventory turnover ratio
cost of sales/other inventories held
36
what does inventory turnover ratio measure
measures how often each year a business sells and replaces stock
37
what is the formula for trade receivables
receivables/revenue x 365
38
what is the formula for trade payables
payables/cost of sales x 365
39
what is investment appraisal
means assessing the financial value of investment
40
what are the 3 formulas for investment appraisal
Payback ARR Net present value
41
what does payback tell us
tells us how long it takes until you repay the investment a shorter payback means investment is paid back fairly quickly
42
what is the formula for payback
amount left to recover/amount received in following year x 12mon
43
what are pros of payback
easy and requires little training focus on cash flow focus on time is useful in dynamic markets
44
what are cons of payback
ignores total return on profitability fails to consider impacts of inflation on real return encourages short term safe investments only
45
what is the formula for ARR
average annual return/initial cost of project x 100
46
what is net present value
looks at how much an investment is in todays money taking into account factors such as inflation or not receiving returns higher % means higher risk of project
47
what is the steps when approaching NPV
Step 1 - take each cash flow and x by given discount factor Step 2 - add up all new net present values Step 3 - take away initial cost = investment NPV
48
what are some non financial factors that might show business performance
labour productivity labour turnover market growth
49
what is a core competency
a competence is something unique that a business has or can do better than its competitors a business strengths can be a significant source of competitive advantage
50
what is GDP
GDP is the value of products in the current state of the economy
51
what is fiscal policy
how the government use the funding they get from taxes to help the economy
52
what are some characteristics of a strong economy
means high demand, more sales and revenue
53
what is the ideal GDP rate
2%
54
what are the 4 stages of the economy
Boom recession slump recovery
55
define recession
this is when the economy is on a decline so employment starts to fall and so do demand and prices
56
what is an exchange rate
an exchange rate is the price of one currency expressed in terms of another
57
what does apperciate mean
increase in value
58
what does depreciate mean
decrease in value
59
what are the 2 important acronyms to remember for exchange rates
SPICED AND WPIDEC
60
what is protectionism
the main aim of this is to protect domestic businesses from overseas competition
61
explain what a tariff is
tariffs are taxes placed on imported goods and services this tax is paid to the government by companies bringing in foreign products
62
what are technical barriers
these are rules and regulations applied to products entering a country
63
what is a quota
quotas are restrictions that set a physical limit on quantity of a particular good imported into a country helps domestic industries by controlling supply of foreign goods
64
what are subsidies
financial support or incentives provided by the government on domestic products making products more affordable or competitive in the global market e.g farmers
65
what is free trade
trading between countries with no restrictions
66
what is the triple bottom line
traditional measure of success often the basis for financial incentives
67
what is in the triple bottom line
Planet, Profit, People
68
describe planet
measures impacts of business on environment e.g emissions use of sustainable inputs
69
describe profit
measures financial success identified from income statement
70
describe people
measures extent to which business is socially responsible very hard to calculate
71
what does CSR stand for
corporate social responsibility
72
what does CSR mean
the business concerns for the social and environmental obligations ( concern for stakeholders)
73
what are all the factors in the CSR pyramid
PR - Philanthropic responsibility - be a corporate citizen ER - Ethical responsibility - be ethical CR - Legal responsibility - obey the law ER - economic responsibility - be profitable
74
what does the government policy include
encouraging enterprise regulating key industries developing infrastructure promoting international trade
75
how does the government encourage enterprise
by proving funding/grants to start up businesses
76
what are the jobs of regulators and what are they
they are watchdogs appointed by the government to oversee some markets/industries that enforce rules and regulations
77
describe the infrastructure part of government policy
government investment in transport, energy and digital networks which can affect business decision on location, logistics and distribution. poor infrastructure may limit expansion or increase costs
78
what are the elements of porters five forces
competitive rivalry buyer power supplier power threat of new entry threat of substitution
79
what is competition law
seeks to protect consumers and also protects businesess from unfair competition
80
what is the labour legislation
designed to prevent the exploitation of employees by businesses
81
what is environmental law
designed to minimise the negative impact of business on environment
A Level Business
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