Business Flashcards
(26 cards)
Give 5 examples of fixed costs
- Rent
- Insurance
- Machinery
- Depreciation
- Labour
What are current assets?
assets that can be converted to cash within one financial year OR available funds in the bank
What are fixed assets?
long term assets eg. land, buildings, equipment etc
What are intangible assets?
non physical resources possessed by the business eg. trademarks, copyrights
Definition of liabilities
financial obligations a company must fulfil in the future eg. loans, lease payments
What are current liabilities?
debts/ financial obligations that must be settled within a year eg. accounts payable, deferred revenue, taxes payable, salaries payable
What are long term liabilities?
debts/ financial obligations that must be settled over more than a year eg. mortgage, loan etc
What is shareholder equity?
the difference between the company’s assets and liabilities
What is the purpose of a balance sheet?
measures the financial performance of the business, showing the business’ assets, liabilities and shareholders equity.
3 advantages of profit and loss accounts
- performance tracking
- identifying trends
- resource allocation
What is a profit and loss account?
summarises the company’s revenue, costs and expenses over a period
What is revenue?
total income from selling the goods/ services
what does COGS stand for?
What is COGS?
Cost of Goods Sold.
the cost of selling the service/ goods
what is gross profit?
Revenue - COGS
What are operating expenses?
costs not directly connected to COGS (eg. rent and utilities)
what is net profit?
final profit after all expenses (including taxes, interest etc)
what is the calculation for gross margin?
(revenue - COGS) / revenue
What issues would a company experience with high staff turnover?
Increased recruitment costs. Increased training costs.
Inconsistent production / performance.
Poor staff morale.
Lower customer satisfaction / reputational damage.
Loss of customers / repeat business.
Higher operating expenditure.
Reduced profitability.
What procedures does your firm adopt to ensure they are profitable?
Timesheets.
Resource planners.
Fee & cost reconciliation tools.
Project reviews.
Yearly Performance reviews.
Team Meetings.
Director one-to-ones.
Business Development Strategy.
Project pipeline monitoring.
Please provide some examples of fee earning vs. non fee earning staff at your company?
Fee earning members of staff would include:-
Chartered Surveyors.
Building Surveyors.
Valuers.
Commercial Real Estate Consultants.
Non fee earning members of staff would include:-
Administration staff.
Business Development Managers.
IT support staff.
Please explain your understanding of the term tax depreciation?
Tax depreciation is where the declining value of an asset is offset against a company’s taxable profit. The depreciation in value can be recorded as an expense in order to reduce the amount of taxable income. This can be applied on things such as plant, tools, vehicles, computers, furniture and buildings.
What is a liquidity ratio?
Liquidity ratios consider an organisations ability to pay their debt obligations and assess its margin of safety by looking at a number of metrics including their operating cash against short term debts.
Name the three different types of accounting ratios?
Liquidity ratios
Profitability ratios
Gearing ratios
What is a profitability ratio?
Profitability ratios assess an organisations ability to generate profits from its sales operations and shareholding equity. The ratio indicates how efficiently a company is in generating its profit.
