1. Business Objectives Flashcards

(53 cards)

1
Q

What is an organisations mission?

A

The fundamental objective of the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the principle goal of a public organisation?

A

To provide services that are deemed important by society

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the 3 common categories of objectives for a public organisation?

A
  1. Demonstrate efficiency in the allocation and use of their resources
  2. Demonstrate balancing of the financial budget
  3. Minimise wastage levels
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the 3 main categories of for profit, private organisations?

A
  1. Sole Trader
  2. Partnership
  3. Limited Company
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the 2 main categories of for not for profit, private organisations?

A
  1. Mutuals
  2. Charities
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the principle goal of a limited company?

A

Maximising the wealth of its shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What 2 things do shareholders expect?

A
  1. A vote in how the company is run
  2. Returns in the form of increasing share price and dividend payments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the primary goal of a charity?

A

To provide a service for the whole of society/a specific group

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the primary goal of a mutual?

A

To provide it’s members with services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the 3 Es of value for money objectives of a not for profit?

A
  1. Efficiency - minimum wastage of resources
  2. Economy - quality at minimum cost
  3. Effectiveness - achieving objectives
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the goal of setting non financial objectives?

A

To satisfy wider stakeholder groups

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the equation for earnings?

A

Profit after tax and preference dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the equation for ROCE?

A

PBIT / TALCL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the equation for Return on Equity?

A

Earnings / Shareholder Funds

where shareholder funds are share capital + reserves

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the equation for gross profit margin?

A

Gross Profit / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the equation for operating profit margin?

A

PBIT / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the equation for net profit margin?

A

PAT / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the equation for asset turnover?

A

Revenue / TALCL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the alternative equation for ROCE?

A

Operating profit margin x asset turnover

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the equation for current ratio?

A

Current Assets / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the equation for quick ratio?

A

Current Assets - Inventory / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the equation for inventory turnover?

A

COS / Inventory

23
Q

What is the equation for inventory days?

A

Inventory / COS x 365

24
Q

What is the equation for receivables days?

A

Receivables / Credit Sales x 365

25
What is the equation for payables days?
Payables / Credit Purchases x 365
26
What is the equation for the working capital cycle?
Inventory Days + Receivables Days - Payables Days
27
What 2 things do gearing ratios indicate?
1. The degree of risk attached to the company 2. The sensitivity of earnings and dividends to changes in profitability and activity level
28
What 3 things does long term debt comprise of?
1. Bank borrowings and bonds 2. Overdrafts 3. Redeemable preference shares (irredeemable are equity)
29
What is the equation for the debt:equity ratio?
Long term debt / Equity
30
What is the equation for gearing?
Long term debt / Equity + long term debt
31
What is the equation for the debt ratio?
Long term debt / Total Assets
32
What is the equation for interest cover?
PBIT / Interest Expense
33
What is the equation for total shareholder return?
Dividend + Change in price / original price
34
What is the equation for EPS?
Earnings / Number of Shares
35
What is the equation for earnings yield?
EPS / Share Price
36
What is the equation for dividend yield?
Dividends per share / Share price
37
What is the equation for dividend payout ratio?
Dividends per share / EPS
38
What is the equation to relate earnings yield (1), dividend yield (2) and dividend payout ratio (3)?
(1) x (3) = (2)
39
What is the equation for P/E ratio?
Share Price / EPS OR Market Cap / Earnings
40
What happens to cost of borrowings when interest rates rise?
Become more expensive
41
What happens to borrowing demand when interest rates rise?
Demand decreases as it is more attractive to save
42
What happens to domestic currency when interest rates rise?
Strengthens due to an increase in deposits by foreign depositors
43
What happens to bond values when interest rates rise?
They fall
44
What happens to inflation when interest rates rise?
Inflation reduces due to decreased demand
45
What happens to business with rising inflation?
Costs increase and so they will often increase prices
46
What happens to investment with rising inflation?
Less investments due to uncertainty about the future
47
What happens to exports with rising inflation?
Exports are less competitive (as domestic prices are high)
48
What happens to imports with rising inflation?
Imports are more attractive
49
What happens to domestic currency with rising inflation?
Weakens
50
What happens to interest rates with rising inflation?
Interest rates rise to compensate savers for inflation
51
What happens to foreign currency transactions when foreign currency strengthens? (Exchange rates rise)
They are worth less
52
What happens to exports when foreign currency strengthens? (Exchange rates rise)
They are less competitive
53
What happens to imports when foreign currency strengthens? (Exchange rates rise)
They are more attractive