Unit Two Business - Finance
Using Budgets :
Variance - the difference between a budgeted figure and the actual figure and the actual figure achieved.
Variance analysis - is the comparison by an organisation of its actual performance with its expected budgeted performance over a certain time period.
Favorable variance- this is a change from a budgeted figure that leads to higher than expected profits.
Adverse variance - this is a change from a budgeted figure that leads to higher than expected profits.
Improving Cash Flow:
Creditors - suppliers owed money by the business - purchases have been made on credit.
Credit Control - the monitoring of debts to ensure that credit periods are not exceeded.
Bad Debt - unpaid customer bills that are now very unlikely to ever be paid.
Over-trading - expanding a business rapidly without obtaining all of the necessary finance so that a cash flow shortage develops.
Measuring and Increasing Profit :
Profit Margin -…