What is capital and revenue expenditure?
What are internal and external sources of finance?
Capital expenditure is the cost of long-term improvents to the company, such as buying new products.
Revenue expenditure is the general running costs of the company such as fuel.
INTERNAL SOURCES OF FINANCE - finance from inside the company.
EXTERNAL SOURCES OF FINANCE - finance from institutions such as banks.
What are the 12 sources of finance? (Describe them)
PROFIT - Difference between the companies total revenue and opperunity costs.
SHARE CAPITAL - Money put into the business by it's owners for use by the business in acquiring assets and retained profits.
LOAN - Money lent at interest usually from a bank.
MORTGAGE - Legal agreement on the terms and conditions of a loan for the purpose of buying legal estate.
SALE OF ASSETS - The sale of current assets such as accounts.
OVERDRAFT - A pre-aggranged limit to which a person can exceed an account balance.
TRADE CREDIT - A short-term source of finance to buy goods which do not need immediate payment.
WORKING CAPITAL - Cash or assets which are readily convertable into cash.
HIRE PURCHASE - A contract to hire goods for a specified period at fixed cost.
LEASING - Where something is hired to someone else and is on a fixed contrac t.
FACTORING - The selling of a businesses account to a third party for funding.
DEBENTURE - A fixed interest stock (bond) secured on the assets of the company.
Why do businesses need finance?
- When setting up a business
- To finance the day to day running of the business.
- To finance expansion.
- To finance a takeover.
- Special circumstances.
- To fund research and development.
What are the seven factors which would influence which choice of finance you would choose?
State the four stages in the development of a business.
Start up phase
Maturity Phase (To gain stability)
What are cash flows?
Cash flow shows us what sales are coming in and the money needed to make them. Cash is the most liquid asset avaiable to a firm.
There is INFLOW and OUTFLOW.
Cash flow does NOT show profit.
Why are there differences between cash flow and profit?
- Some goods sold would be on credit
- Cash may be recieved at the start of the year from sales from the previous year. (TRADING YEAR IS 5TH APRIL-5TH APRIL)
- Owners may introduce more cash such as selling an unwanted asset or taking on a new partner.
- Buying new assets can increase profits.
Why is cash flow important?
- Allows the firm to see if they can pay their suppliers.
- Cash gives the firm opportunity to pay bills.
- It helps to prevent insolvency (when the firms external liabilities are greater than it's assets.)
How is it possible for profitable businesses to fail?
Yes, as with a lack of short-term funds, poor managment or unable to pay bills.
What is HRM and what is it's job?
Also, what are it's goals?
HRM stands for Human Resources Management and is way of management that links people-related activities to the strategy of a business or organisation. Can also be called "strategic HRM".
They have several goals; to meet the needs of the business, to link human resources to objectives, to find ways to add value.
What is workforce planning and what are the main steps invloved?
Workforce planning involves looking at the present workforce and the future requirements. There are certain steps which are taken...
- Auditing the current staff (how old are they, how many?)
- Future business needs (right employees to help reach objectives)
- Implement its human resouce polices
Name two of the factors which make workforce planning particularly crucial.
- People leave all the time for a variety of reasons.
- The firm should be ready to replace them.
- May be time to find people with new skills.
- Internal rather than external appointment.
- Respond to change.
- Reasons for leaving need to be analysed.
- Technology requires revision of workforce.
- Redundancy, retraining and/or new employment must be planned.
Appart from human resources, what other information must companies gain during resource planning?
- Research future sales.
- If wages rise, businesses may seek greater use of technology.
- The plan will show changes in the output of the workforce. IE. change to the working week.
- Technology departments may impact on the plan as this field may reduce the need for unskilled employees.
Define market research and name the two types.
Market research is the process of gathering data from potentail customers, competitors and distributers within the firm's target market.
The two types are:
- DESK (i.e looking at secondary information from the internet)
- FIELD (i.e going and getting the research first hand from a selected sample)
Name the five different types of sampling.
Quota Sampling: The selection of a predetermined number of elements from different sectors of the population.
Stratified Sampling: A sample in which each element in the population has an equal chance of being chosen for the sample.
Random Sampling: Given a specified sampling procedure, all consumers within the universe have an equal chance for respondent selection.
Convince Sampling: A non-random sampling technique based on convenient access to study participants.
- Cluster Sampling: Cluster sampling is most frequently applied in situations where members of the population are found in clusters
What are the five ways which a business can be organized into?
- Function (ie. human resources, marketing, production, finance)
- Product/ Activity (ie, soups, beans etc)
- Area (ie. country)
- Customer (ie. a specific group)
- Process (ie, departments may take responsability for each area)
What is meant by hierarchy and what is meant by "span of control"?
Definition: a series of ordered groupings of people or things within a system.
The span of control is who they have DIRECT control of.
Define the role of a manager.
- To plan
- To control
- To lead
- To organise
Define the term "accountability"
The idea that a business and it's owners are responsable and answerable to the stakeholders for their activities.
What are the two sections of a company report called and what is contained within them?
- Report and has a timeline/text about the year.
- Account and contains details as to where money has gone.