Sources of finance
what is short term finance?
This is money borrowed for one year or less
what is quantitive information?
information expressed in numbers
What is the Acid Test Ratio Formula?
Acid test Ratio =
current assets- inventory/stock ÷current liabilities
True or False: Casual employees are also considered 'on-call' workers
TRUE
Which of the following is an internal source of finance
Overdraft
Selling Assets
Venture Capital
Crowdfunding
Selling Assets
What is a statement of financial position?
This is a summary of a businesses assets, liabilities and capital used to show the value of a company at a given time.
What does a high ROCE mean?
A high ROCE means that a company is getting high returns for the money invested.
Name 2 documents used during the recruitment process
1) job description - outlines duties of the position
2) Person description - qualities, experiences, skills they would like in an employee
3) Curriculum Vitae (CV) /resume - an applicants work and skill history
4) Application Form - A form for applicants to submit necessary information/details
Name 3 reasons why a business might need funding
Expansion
Start up capital
Short term needs
Long term needs
State three uses of financial documents to owners of a business.
Applying for loans
Find areas to improve
What are two ways a business can improve their gross profit margins?
1) Increase revenue/sales
2) Lower costs
What are 2 advantages of using internal recruitment?
1) Business is already familiar with the attitude, work ethic, and potential of the applicant
2) The applicant will already be familiar with the jobs policies, etc and may require less training
3) Employees can be motivated by chance for promotion
4) Cheaper since you don't need to pay to advertise
5) Faster because you may have less applicants to consider and can schedule appoints/interviews easily
Why would a business need to expand? Give 3 reasons
Develop new products
Branch into new markets
To meet growing orders
Three Disadvantages of venture capital?
(Must be correct word for word)
Business owners have to be comfortable with sharing profit with the 'angel'
Finding a suitable 'Angel'
The owner and the 'Angel' should share the same interest.
If an Acid test is calculated, and the answer comes out less than 1.0, What does this tell us about the business?
It shows that current assets does not cover the liabilities of the business.
Part of the recruitment process in which the best candidates are identified from all applications and will then continue to the interview phase.