Unit 7 Flashcards
(43 cards)
what is a SWOT analysis
a situational analysis used to aids decision making
helps corporate objectives and strategies
what does SWOT stand for
strengths, weakness, opportunities and threats
strengths and weaknesses are internal
opportunities and threats are external
what is a customer centric approach
always thinking of what customers want in every approach
what are the pros of SWOT
provides comprehensive analysis of market
highlights what business is good at and its weaknesses
what are the cons of SWOT
doesn’t provide clear choice
data can be inaccurate
can generate too much data and can be conflicting
what are assets
things that a business owns
what are liabilities
money business owes
what is liquidity
ability to turn assets into cash
what is bad debt
when debtors wont ever pay
what is capital employed
all money borrowed by business
what is working capital
cash business has available for day to day
what is appreciation
assets decrease in value over time
what is depreciation
when assets decrease in value over time
what are receivables
money paid to business
what are reserves
figure that notes depreciation value
what is equity
total shareholder funding that should match net assets of the business
what is the equation for Return On Capital Employed
operating profit / capital employed
what is equation for capital employed
total assets - current liabilities
what is ROCE
measures the return a business makes from capital it has been invested
what must ROCE and profit margins be compared with
previous years data to look for trends
other similar business figures to change
what is the formula for current ratio
current assets / current liabilities
what can current assets include
cash, receivables and inventory
what are liabilities
money to be paid in short term e.g payables and overdraft
what is an ideal ratio
between 1 : 5 : 1 and 2: 1
