Paper 2

Question 1

working capital

Answer 1

finance available for day to day running of business

Question 2

creditor/debtor

Answer 2

creditor - you owe money
debtor - owes you money

Question 3

overtrading

Answer 3

using overdraft and loans to much

Question 4

sources of finance medium term

Answer 4

hire purchase
leasing

Question 5

role of business plan

Answer 5

helps financers assess
analyse competitiveness
help determine amount/type of finance

Question 6

problems with cash flow forecast

Answer 6

sales lower than expected
customers not paying on time
costs more than expected

Question 7

breakeven

Answer 7

fixed costs/contribution

Question 8

types of budgets

3

Answer 8

revenue(income)budget
cost(expenditure)budget
profit budget

Question 8

budgeting approaches

2

Answer 8

historical budgets
zero based budgets

Question 9

when would adverse budget variance be positive value

Answer 9

if costs higher than expected

Question 10

income statement

Answer 10

measure business performance in period

Question 11

statement of financial position

Answer 11

snapshot of business assets

Question 12

current/short term assets

Answer 12

inventories
recievables
cash

Question 13

non-current assets

Answer 13

land,property,machinery,copyright,patents

Question 14

current ratio

Answer 14

current assets/
current liabilities

aim for 1.5-2:1

below 1 cash flow problems

Question 15

acid test ratio

Answer 15

current assets less stock/
current liabilities

ideal 1:1

Question 16

debt factoring

Answer 16

selling debt to baylif

Question 17

pestle

Answer 17

political
economical
social
technological
legal
environmental/ethical

Question 18

deflation/disinflation

Answer 18

deflation - decrease in prices
disinflation - slow in rate of inflation

Question 19

CSR

Answer 19

corporate social responsibility

businesses self regulate to make sure benefit society

Question 20

CMA

Answer 20

competition markets authority

regulate competition in UK

block takeovers

Question 21

spectrum of competition

Answer 21

monopoly
duopoly
oligopoly
monopolistic competition
perfect competition

Question 22

porters 5 forces

Answer 22

threat of new entry
threat of situation
supplier power
buyer power
competitive rivalry

Question 23

smart objectives

Answer 23

specific
measurable
acheivable
relevant
timebound

Question 24

ansoff matrix

Answer 24

market penetration product development market development diversification

Question 25

porters low cost v differentiation

Answer 25

cost leadership cost focus differentiation leadership differentiation focus

Question 26

kays distinct capabilities

Answer 26

architecture-relationship reputation innovation | add value

Question 27

swot analysis

Answer 27

strengths weaknesses opportunities threats

Question 28

payback period

Answer 28

sum invested/ net cash per time period

Question 29

ARR

Answer 29

average annual profit/ initial outlay x100

Question 30

discounted cash flow

Answer 30

cash flow x discount factor

Question 31

Decision trees

Answer 31

demand low+high = emv -cost of investment = net gain

Question 32

two approaches to decision making

Answer 32

subjective - gut feeling evidence based - data analysis

Question 33

leadership styles

Answer 33

autocratic laissez faire democratic paternalistic bureacratic

Question 34

handys four classes of culture

Answer 34

power role task person

Question 35

roce | return on capital employed

Answer 35

operating profit/ total equity + noncurrent liabilities | total equity = retained profit + share capital

Question 36

gearing

Answer 36

non current liabilities/ total equity + non current liabilities x100

Question 37

labour turnover

Answer 37

no employees leaving/ avg no of employees x100

Question 38

labour productivity

Answer 38

output/ no employees

Question 39

methods of change

Answer 39

step change incremental change

Question 40

methods of scenario planning

Answer 40

risk avoidance risk limitation risk transferance business continuity succesion planning