3.5

Question 1

what is a profit and loss statement

Answer 1

a financial document showing the company revenue or income over a year and their costs and expenditure

Question 2

why are profit and loss statements useful

Answer 2

legal requirement
sums up performance for stakeholders
can be compared to previous years
investors and lenders need to see one before making deals
can help with forecasting

Question 3

what is sales revenue

Answer 3

money obtained by the sale of goods or services

Question 4

what is cost of goods

Answer 4

costs that are directly attributed to sales, vary depending on sales

Question 5

how do you calculate gross profit

Answer 5

sales-cost of sales

Question 6

what are expenses

Answer 6

other costs a business has that are not directly associated with sales or production

Question 7

what is operating profit

Answer 7

profit after all expanses have been taken off

Question 8

what is capital employed

Answer 8

measure of the value of assets minus current liabilities

Question 9

what is a balance sheet

Answer 9

shows how much a business is worth, shows a businesses assets & liabilities

Question 10

what are non current assets

Answer 10

long term assets of a business which are not expected to be sold within the next year of trading

Question 11

what are intangible assets

Answer 11

copyright, trademarks, patents

Question 12

what are tangible assets

Answer 12

property, equipment

Question 13

what are current assets

Answer 13

short term assets of the business which are likely to be turned into cash within the next year of trading

Question 14

what are inventories

Answer 14

stocks of raw materials

Question 15

what are non current liabilities

Answer 15

debts which are not expected to be paid off within the next year of trading

Question 16

give some examples of non current liabilities

Answer 16

pensions
money set aside for future expenses

Question 17

what are current liabilities

Answer 17

debts which are expected to be paid within the next year of trading

Question 18

give some examples of current liabilities

Answer 18

corporation tax
short term loans

Question 19

what are the uses of a balance sheet

Answer 19

evaluate performance of the business
evaluate potential of a business to an investor
summary valuation of the business

Question 20

what are the limitations of a balance sheet

Answer 20

value of assets stated may not be the same as the amount they will sell for
intangible may not include other non monetary value

Question 21

why do the government have an interest in a businesses balance sheet

Answer 21

they will use the financial information to calculate the amount of tax that a company has to pay

Question 22

why do shareholders have an interest in a businesses balance sheet

Answer 22

analyse the accounts and decide whether their investment capital is being used effectively

Question 23

why do directors & senior managers have an interest in a businesses balance sheet

Answer 23

use accounts to assist their medium & long term planning

Question 24

what is the equation for current ratio

Answer 24

current assets/current liabilities

Question 25

what is the equation for the acid test ratio

Answer 25

current assets - stock/current liabilities

Question 26

what is the equation for gearing ratio

Answer 26

loan capital/capital employed X100

Question 27

what is the equation for ROCE

Answer 27

operating profit/capital employed X100

Question 28

what is operating profit

Answer 28

profit before interest & taxes

Question 29

what is the equation for capital employed

Answer 29

fixed assets + current assets - current liabilities

Question 30

what are the limitations of using ratio analysis

Answer 30

based on a snapshot of the business - markets are dynamic figures could quickly change only as reliable as the information provided needs to be compared against other figures must be kept in context of the industry

Question 31

if a business wishes to achieve their objectives it is important that the workers:

Answer 31

know the objectives agree with these aims work towards objectives

Question 32

what could happen to organization whose employees do not work towards the businesses objectives

Answer 32

progress is slow strategic achievement suffer uncoordinated projects don't get delivered operational performance declines giving up productivity gain of up to 25%

Question 33

what are employee contributions

Answer 33

training & skills - a better trained workforce is generally more motivated, flexible & productive empowerment - allowing workers to contribute ideas & allow decision making to increase moral leadership - style of leadership must be appropriate to the business circumstances

Question 34

how can you measure workforce moral

Answer 34

surveys appraisals waste levels reject rates consumer complaints industrial relations record

Question 35

what are the reasons for poor motivation

Answer 35

employees feel the job or workplace is not what they expected there is mismatch between job & person too little coaching & feedback too few growth & advancement opportunities feel devalued & unrecognized feels stress from overwork & have bad work/life balance loss of trust & confidence in senior leaders

Question 36

how can workforce morale be calculated

Answer 36

labor productivity labor turnover absenteeism rate

Question 37

what is the equation for labor productivity

Answer 37

output per time period/average number of employees

Question 38

how can labor productivity be improved

Answer 38

kaizen, TQM, lean production

Question 39

what is absenteeism rate

Answer 39

measures the proportion of the total workforce who are absent over a particular period of time

Question 40

what is the equation for absenteeism rate

Answer 40

number of working days lost/total number of working days available X100

Question 41

what causes high absenteeism rates

Answer 41

poor recruitment, weak induction, lack of challenge, low pay rates

Question 42

what is the equation for labor turnover

Answer 42

number of employees leaving/average number of employees X100

Question 43

what is low staff morale or job satisfaction caused by

Answer 43

poor management, stress, role overload or underload, lack of recognition, poor working conditions

Question 44

how could low staff morale and job satisfaction be improved

Answer 44

job enlargement, job rotation, incentive schemes

Question 45

how could a business reduce absenteeism

Answer 45

introducing more flexible working practices, ensuring jobs are interesting & challenging, improving working conditions & reducing dissatisfaction, improving relations between employers & employees introducing attendance bonuses as an incentive to attend regularly