2.3 Managing Finance 1.0 / 5 based on 1 rating ? Business StudiesFinancial PlanningASEdexcel Created by: tomstodd23Created on: 03-05-18 11:40 Fixed Asset (Non-Current Asset) Resources that can be used repeatedly (for more than 1 year). 1 of 18 Current Asset Short-term items that will be turned into cash within a year. 2 of 18 Tangible Things you can see, e.g. stock. 3 of 18 Intangible Things you can't see, e.g. brand name. 4 of 18 Recievables These are debts owed to the business. 5 of 18 Long term (not current) Liabilities Debts due for repayment after a year. 6 of 18 Operating Profit Gross Profit- Operating expenses (the costs associated with producing, marketing and selling the goods). 7 of 18 Current Ratio Formula Current Assets/ Current Liabilities. (1.8-2.2 is ideal) 8 of 18 Acid Test Current Assets- Stock/ Current Liabilities. (0.8-1.2 is ideal) 9 of 18 Budget This is a plan of expenditure or action, which is agreed in advance and linked to the company's objective. 10 of 18 Variance Analysis Refers to the difference between the actual figures and budgeted figures. Adverse (A) and Favourable (F). 11 of 18 Internal causes of business failure Lack of planning; cash-flow problems; lack of funds; narrow customer base; marketing problems; poor leadership. 12 of 18 External causes of business failure Competition, changes in consumer tastes, economic conditions, market price changes. 13 of 18 Reasons why companies set budgets Control and Monitoring; Planning; Co-ordination; Communication; Effieciency; Motivation 14 of 18 Two types of budgeting Historic Budgets; Zero-Base Budgeting 15 of 18 Skimming Pricing Setting prices very high when a product is introduced to take advantage of people's desire for a new product. 16 of 18 Pyscological Pricing E.g. £99.99, to make a product look cheaper. 17 of 18 Premium Pricing Can charge higher rates due to brand loyalty. 18 of 18
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