How do you work out liquid capital ratio?

(current assets – inventory)/current liabilities.

What are profit margins?

difference between total costs to run and total revenue brought in

Product development is…

replacing existing products to maintain market share

How do you work out return on capital employed (ROCE)?

net profit / capital employed x 100

How do you calculate margin of safety?

actual sales - break even output

Mark-up ratio is calculated by

(gross profit/cost of sales) × 100

What are the 5 C's used for?

analyse the environment a business operates in

What is Mark-up ratio?

the difference between the cost of sales and selling price.

What should be included in the introduction?

brief overview of how the market they operate in, might affect the options

What is Porter's Five Forces used for?

analyse market power and competition

What is margin of safety used for?

to know how much sales can decrease before becoming unprofitable

What is the breakeven formula?

fixed costs / (price - variable costs per unit)

What is a SWOT analysis?

Strengths, weakness, opportunities and threats

What is diversification?

Introducing new products into new markets

What is market penetration?

growth in a market, potential to attract new customers

Company customers competitors collaborators climate

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Unit 7 - Business Decision Making

37 termsStudBud Administration519 plays

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Questions 37

Answers

1
How do you work out liquid capital ratio?
(trade payables/credit purchases) × 365
(current assets – inventory)/current liabilities.
(trade receivable/credit sales) × 365
current assets/current liabilities
2
What are profit margins?
difference between assets and liabilities
difference between turnover and balance sheet
difference between total costs to run and total revenue brought in
difference between revenue and profit
3
Product development is…
increasing sales by selling present products in new markets
growth in a market, potential to attract new customers
replacing existing products to maintain market share
developing new products and selling them in new markets
4
HR doesn't involve...
recruiting and hiring
financial planning
workplace safety
training and development
5
A ratio of between 1.5:1 and 2:1 is most desirable.
True
False
6
How do you work out return on capital employed (ROCE)?
fixed costs / capital employed x 100
sales revenue / capital employed x 100
net profit / capital employed x 100
gross profit / capital employed x 100
7
Break even analysis is used to determine at what point a company, or a new product/service, will be profitable
False
True
8
How do you calculate margin of safety?
current assets / current liabilities
gross profit - expenses
actual sales - break even output
selling price - variable cost per unit
9
Mark-up ratio is calculated by
(gross profit/cost of sales) × 100
(gross profit/revenue) × 100
(net profit/revenue) × 100
(net profit/capital employed) × 100
10
What are the 5 C's used for?
analyse products and market
analyse market power and competition
analyse the environment a business operates in
development of new and existing products
11
The report should NOT include
Key factors/risks
Implications of resources
Irrelevant market data
Financial Forecasts
12
The inventory turnover ratio measures how long the average item of stock is held by a business before it is sold.
False
True
13
What is Mark-up ratio?
to measure how effective a firm is in managing all costs including expenses
to analyse how effective a firm has been in managing their cost of sales.
the difference between the cost of sales and selling price.
calculates how much profit a firm makes in comparison to the investment
14
Which technique is used to identify gaps in the market?
Gantt Chart
Critical Path Analysis
Ansoff Matrix
Porters 5 forces
15
You only need to link back to the option you think is best
False
True
16
Which of the following is not a type of business ownership?
Corporation
Cooperative
Sole partnership
Sole trader
17
A ROCE of atleast ____ % is a sign a company is in a good financial position
30%
15%
20%
25%
18
What should be included in the introduction?
brief overview on how your chosen option is profitable
brief overview of how the market they operate in, might affect the options
brief overview on the competition of both options
brief overview on why the business will be more profitable with option 1/2
19
Net profit is the sales revenue - cost of goods sold
False
True
20
Gross profit is calculated by…
total assets - current liabilities
Total cash inflow - total cash outflow
Revenue - net profit
Revenue - cost of goods sold
21
Porter's five forces does NOT include
Threat of substitutes
Threat of new entrants
Power of suppliers/buyers
Bargaining power of finances
22
What is Porter's Five Forces used for?
development of new and existing products
creating a marketing plan
analyse market power and competition
analyse products and market
23
Market development is trying to increase sales by selling present products in new markets
True
False
24
What does USP stand for?
Unique selling product
Unique selling point
Unique selling price
Unique selling promotion
25
What is margin of safety used for?
to know how many sales will make it safe for the business
to know the health and safety at work act
to know how much sales can decrease before becoming unprofitable
to know the sales needed to make the business break even
26
How do you work out net profit?
sales revenue - cost of goods sold
current assets - current liabilities
gross profit - expenses
actual sales - break even output
27
What is the breakeven formula?
actual sales - break even output
fixed costs / (price - variable costs per unit)
current assets - current liabilities
selling price - variable cost per unit
28
Which implication of resource should you NOT include?
Technology resources
Physical resources
Financial resources
Human resources
29
To remain profitable, the company must have a positive margin of safety.
False
True
30
Profit margin = (gross/net)profit / sales revenue x 100
False
True
31
Liquidity is a measure of a company's ability to pay off its short-term liabilities
False
True
32
What is a SWOT analysis?
Strengths, weaknesses, operating profit, threat
Strengths, weakness, opportunities and threats
Strengths, weaknesses, option and threats
Strengths, weaknesses, opportunities and time
33
What is diversification?
Introducing new products into new markets
Introducing an exisiting products into new markets
Introducing an existing product into existing markets
Introducing new products into existing markets
34
What is market penetration?
growth in a market, potential to attract new customers
adapt to appeal to different market segments
increase sales by selling present products in new markets
developing new products and selling them in new markets
35
Which of the following are not part of the Boston Matrix?
Stars
Diversification
Question Mark
Cash Cows
36
What are the 5 Cs?
Company Capability Competitors collaborators Climate
Company customers climate competitors
company customers competitors compassion care
Company customers competitors collaborators climate
37
Cash cows in the Boston Matrix have...
low growth, low market share
high growth, low market share
low growth, high market share
high growth, high market share

Unit 7 - Business Decision Making Flashcards | StudBud