Unit 7 Flashcards
(38 cards)
What is a cooperate objectives
It is an objective that is set with the business as whole in in a time frame which will be aligned with SMART goals. to allow a business to achieve their mission.
- Cooperate objectives can lead to cooperate stratigies too.
Internal factors that influence cooperate objectives and decisons
-Business ownership: Types of ownership will have a different impact on the business e.g. sole traders and private limited companies will not be affected by short-termism
- Business culture: For decisons to be applied successfully will need to be aligned with the culture values in order to gain full support
- Business performance: Business performance will likely reflect on finance which in turn can affect the quality of how a business can run e.g. the quality of their employees.
External factors that influence corporate objectives and decisions
- Pressures for short-termism: Occurs when a business will have decison making which only has short term effects such as pleasing shareholder value. Which in turn can damage the long-term goals of an organisation due to the lacking fundamentals.
Examples of the causes of short-termism include:
- Pressures from investors for short-term outcomes
- Directors postions are dependent on shareholders
- the frequency of financial reporting e.g. red tape crisis
Strategy for a business
- A strategy is for a medium-long term value for a business.
Functional decision making
Refers to a decision which has been made to aim for the four fundamentals of a business which are :
- Finance
- HR
- Operations
- Marketing
What is SWOT analysis
Is an analytical tool which identifies the internal strength and weaknesses and the external opportunities and threats.
What is the value of SWOT analysis
- Managers can develop new stratiges which can build on the positives whilst alleviate the negatives
How can SWOT analysis be summed up
- Helps firms to identify their core competencies, which can help build on their strengths.
- Helps firms focus on their future given its past and present condition
- It’s a source of strategic planning
- Identifes the optimal ways to achieve gains for the business
What are liabilities
- They are what the business owes. What the business gain during the course of business obligations
What is capital employed
The value of total equity plus non-current liabilities.
- The total money invested into the business
What are Non-current liabilties
debts that will be repaid under 1 year.
What are assets employed
The value of non current assets plus current assets
What is profit quality
The level to which profit is likely to continue into the future.
How to work out capital employed
Net operating profit/captial employed X 100
What is liquidity
Measures the extent in which a business is able to pay their short-term debt.
Done by the current ratio analysis
What does the gearing ratio measure
The business leverage and shows the extent to which their operations are funded by loans rather than their equity
What is the gearing ratio
non current liablties/total equity + non current liablties X 100
How to calculate payable days
Payables/cost of sales X 365
How to calculate recievable days
Receivables/revenue X 365
What do receivable days mean
The number of days it takes to convert receivables into cash
What is inventory turnover
The number of times per period a business sells and replace its entire stock with inventories.
How to calculate inventory turnover
Cost of good sold/ average inventories
What comparisons can be made via fincial performance
- Compare against the previous year results to see how they can improve
- Compare results with any other business in the same industry
What is the historical nature of financial performance
- Changes in the economy
- Actions of competitors
- Advancements on technology
