Unit 7 Flashcards
Why do businesses exist?
-Profit
-Growth
-Survival
-Cash flow
-Social
-Ethical
What’s a mission statement?
Brief, written statement of the purpose of a company or organisation
What are the influences on the mission of a business?
-Size
-Nature of owner and Stakeholders
-Changes over time
-Business performance
-Social responsibility
-External factors
What’s a strategy and what’s a tactic?
-Strategy-medium to long term plans to achieve objectives
-Tactic-how the strategy is carried out at a functional level
How can financial performance of a business be assessed?
Balance sheets-document summarising the net worth of a business
income statement-document summarising a business’ trading activities and expenses
How to calculate sales revenue?
Quantity sold X selling price
How to calculate gross profit?
Sales revenue - cost of sales
How to calculate operating profit?
Gross profit - expenses
How to calculate profit for the year?
Operating profit - tax and interest
Whats the difference between intra and inter business comparisons?
Inter-comparison from within the business
Intra-comparison with competitors
What’s the equation for return on capital employed (ROCE)?
(Operating profit/total equity + non current liabilities) X 100
What’s the equation for liquidity?
Current assets/current liabilities
What’s current ratio
Current assets:Current liabilities
0.7:1
(for every pound the business owes it earns 70p)
What’s the equation for gearing?
(Non current liabilities/total equity+non current liabilities) X 100
