Small Business Evaluation Flashcards
(26 cards)
What is effectiveness ?
The degree to which a business has achieved its objectives.
What is efficiency?
How well a business uses resources to achieve objectives
What are performance indicators ?
Measurable statements which businesses use to evaluate performance.
What are financial indicators?
Found in the accounting records and are expressed in dollar terms.
What are non financial indicators?
Commonly expressed In real terms and often make use of qualitative data
What are financial statements?
Summaries the activities of a business over a period of time
What is net profit?
The difference between revenue earned from the operations of the business and any expenses incurred in earning that revenue.
What are expenses?
What is has cost the business to provide its services or sell its products
What is revenue?
What the business receives in the normal course of trading or operating, including sales, fees, interest, dividends, royalties and rent
What is profitability?
Measures the earning performance of the business and indicates the businesses ability to maximize profits
What is cost of goods sold?
The cost of materials used to produce the goods and any direct labour costs involved in producing the goods
What is balance sheet?
Shows a businesses assets and liabilities at a point in time using the heading as at to pinpoint when it was created
What are assets?
Items of value owned or controlled by the business and that can be given a monetary value
What are liabilities ?
Items of debt that the business owes
What is evaluation?
The process of assessing whether the business has achieved stated objectives.
What is owners equity?
Money given to the business by the owner for the purchase of resources and for undertaking operations
What is liquidity?
The extent to which the business can meet its financial commitments in the short term
What is solvency?
The extent to which the business can meet its financial commitments in the longer term
What is gearing?
Measures the percentage of the assets of the business which are funded by external sources
What is gross profit ratio?
Shows the amount of revenue that results in gross profit
What is net profit ratio?
Shows the amount of revenue that results in net profit
What is working capital ratio ?
Measures the level of current assets available to meet a businesses current liabilities
What is customer satisfaction ?
The degree to which the businesses perceived performance meets a customers expectations.
What is benchmarking?
Compares the strengths and weaknesses of a business against those of other successful businesses, with the aim of reforming those processes that are not achieving the businesses objectives.
