Fmance

Question 1

Revenue objectives

Answer 1

Revenue growth ir sales maximisation

Question 2

What is cost minimisation

Answer 2

Reducing expenses to the lowest possible level without compromising quality

Question 3

What are advantages of cost cutting

Answer 3

Can reduce prices to remain more profitable
Can increase profitability

Question 4

What is a profit maximisation

Answer 4

Achieving highest possible level of profit in a given time

Question 5

Key considerations of profit

Answer 5

Ethically

Question 6

Setting roi objectives

Answer 6

Measure profitability by measuring the returns of each activity
Allocate resources to favour production that has the best returns

Question 8

What are the types of profit

Answer 8

Gross profit
Operating profit
Net profit

Question 9

What are Finance costs

Answer 9

Expenses incurred by a business for borrowing money

Question 10

What is taxation

Answer 10

The ammount of tax a business owes on its profit

Question 11

How to calculate gross profit

Answer 11

Revenue-cost of sales

Question 12

How to calculate operating profit

Answer 12

Gross profit- operating expenses

Question 13

Calculate Net profit

Answer 13

Operating profit- finance costs

Question 14

Net profit after tax calculate

Answer 14

Net profit- tax

Question 15

What is profitability

Answer 15

How effiectively a business generates profit from its revenue or operations

Question 16

Calculate profit margain

Answer 16

Profit/revenue x100

Question 17

Factors that affect profitability

Answer 17

Direct competition
The amount competition changes

Question 18

What are budgets

Answer 18

A forecast predicting the total revenue and expenses of a business

Question 19

Variance calculation

Answer 19

Actual value- budgeted value

Question 20

What occurs at a favourable variance

Answer 20

High revenue
Low costs
More profit

Question 21

Advantages of budgeting

Answer 21

Helps monitor and control income and expenses

Provides clear targets motivating employees

Assists business in decisiom makinh

Question 22

Assumptions of break even

Answer 22

We assume variable costs stay the same

We assume all units are sold

We assume a fixed selling price

Question 23

Calculating contribution per sunit

Answer 23

Price- variable costs per unit

Question 24

Calculating break even point

Answer 24

FC/contribution per unit

Question 25

Calculate TVC

Answer 25

Variable cost x units sold

Question 26

CALCULATE MARGAIN OF SAFETY

Answer 26

Actual output- break even point

Question 27

What does a higher margain of safetu mean

Answer 27

Further from break even point, more profits

Question 28

Pros of break even analysis

Answer 28

Evaluates the financial feasibility of new producs ot prijects Assists in decision making - PED?

Question 29

When does break even fail

Answer 29

When you are selling more than one product

Question 30

How to calculate closing balance

Answer 30

Net cash flow+ opening balance

Question 31

Internal sources of finance

Answer 31

Retained profits Sale of assests

Question 32

How might using retained profit as a source of finance be advantageous

Answer 32

No debt No interest rates

Question 33

Disadvantages of using retained profit

Answer 33

Lower dividends May not have enough profit

Question 34

What is meant by sale of assets and how is it advantageous

Answer 34

Sale of assets essentially refers to the process of a business selling unused or unwanted assets An advantage if this is it may reduce business costs

Question 35

Risks of selling assets

Answer 35

This asset may need to be used in the future

Question 36

External sources of finance

Answer 36

Debt factoring Overdraft Share capital Loan

Question 37

What is debt factoring

Answer 37

When unpaid invoices are bought up by firms for cash

Question 38

Disadvantages of debt factoring

Answer 38

No longer recieves all the money earned for receivables Brand image falls due to actions of the factoring company

Question 39

What is an overdraft

Answer 39

Bank allows more to be withdrawn from bank account

Question 40

Cons of overdraft

Answer 40

High interest rates incresing costs

Question 41

What is share capital

Answer 41

The money a company raises by issuing shares to investors

Question 42

Advantages of share capital

Answer 42

Large amounts of finance Dint need to return

Question 43

Cons of venture capital

Answer 43

Dilutes ownership Pay dividends across a large number of shareholders

Question 45

What rae loans

Answer 45

Borrowed sums of money repaid over time

Question 46

What is the interest like on a small business

Answer 46

High interest rates

Question 47

What is crowdfunfing

Answer 47

Raise funds by gathering contributions from many people

Question 48

Pros of crowdfunding

Answer 48

Gain some public interest

Question 49

Disadvantages on crowdfunding

Answer 49

No garuntee if meeting targets If idea is public rivals can use it

Question 50

What is ventire capital

Answer 50

Private funding for small businesses with large potential in returns for ownership

Question 51

Pros of venture capital

Answer 51

Venture capitalists are often experts Dont need to be repaid

Question 52

Cons of venture capital

Answer 52

Dilutes control Venture capitalists want high profits

Question 53

How to boost cash flow

Answer 53

Boost revenue Look for sources of finance Manage credit periods JIT production? Reduce unecessry expenses

Question 54

How to improve profits

Answer 54

Increase prices Improve labour productivity Automation Cheaper suppliers Reduce waste Improve capacity utilisation