Business - Putting a business idea into practice 4.5 / 5 based on 2 ratings ? Business StudiesPutting a business idea into practiceGCSEEdexcel Created by: SophieRevisesCreated on: 13-04-18 12:03 Objectives Objectives help businesses to achieve their aims. They need to be SMART. Specific - cleary defined or identified e.g. increase profits Measureable - able to be measured e.g. increase by 10% Agreed - discussed and then accepted e.g. everyone is involved Realistic - a sensible and practical idea e.g. target is achievable Timed - will be met within a given period of time e.g. 12months 1 of 10 Revenue Revenue is the income a business gets from sales Can sometimes be called turnover Revenue=Price x Quantity Can come from different groups of customers. Each group is called an income stream 2 of 10 Costs The expenses of the business e.g. bill, wages etc. Fixed Costs Costs that stay the same no matter what the output e.g. wages Variable costs Costs that change depending on the output e.g. raw materials Total Costs Fixed costs + variable costs 3 of 10 Profit Profit = revenue - costs Gross profit - the profit a business has before costs have been deducted Net profit - the profit a business has after costs are deducted 4 of 10 Interest When a business borrows money, it will have to pay it back with interest. total repayment - borrowed amount Interest = -------------------------------------- x100 borrowed amount 5 of 10 Break-Even Break-evn is where the sales revenue is equal to the costs of the business. The break-even point can be calculated using: fixed costs break even point in units = ---------------------------------- sales price - variable costs break even point as revenue = break even point in units x sales price 6 of 10 Margin of Safety The margin of safety is the difference between how much a business produces and how much it needs to produce to break even. Margin of safety = actual/budgeted sales - break even sales 7 of 10 Cash Flow The flow of money in and out of a business. Inflows - money coming into the business - e.g. Cash from sales, savings and loans Outflows - money going out of the business. - e.g. wages, materials, bills, interest and advertising Net cash flow = Inflows - outflows 8 of 10 Finance 5 reasons it is needed by a business: -As start-up capital -As additional finance to cover costs -To cover delayed payments from customers -To meet a businesses day to day running costs -To allow expansion 9 of 10 Finance 5 reasons it is needed by a business: -As start-up capital -As additional finance to cover costs -To cover delayed payments from customers -To meet a businesses day to day running costs -To allow expansion 10 of 10
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