1.3.1 Business aims and objectives
What TWO categories are a Businesses aims and objectives broken into?
Financial and Non-financial.
State one concept that we calculate in business.
Can accept:
- Revenue
- fixed costs
- Variable costs
- total costs
- profit/loss
- Interest
- Break-even
- Margin of safety
What is one example of an overhead cost?
Can include:
- Rent
- Any utilities
- telephone bills
What is an 'Overdraft' and name a feature of it?
It is a flexible short-term lending options for a business. Features can include:
- Variable interest rates
- flexible
- the bank can demand full payment
Why doesn't Mr Heffernan give our sweets anymore?
Because he was enjoying them too much and getting chonky.
Name 2 financial aims of a business.
Can accept:
- Survival
- Profit
- Sales
- Market share
- Financial security
What is the difference between a fixed and variable costs?
A variable costs is a costs that changes with every extra unit sold. A fixed cost is something that never changes no matter how much is sold.
What does it mean when business arranges 'Credit' with a supplier?
Credit terms are a tool businesses can used to pay for raw materials or stock at a later date.
What is 'Trade Credit' and how can it be used?
Trade credit must be agreed with a supplier and forms a credit agreement with them. It allows a business to obtain raw materials and stock but pay for them at a later date.
What football team does Mr Heffernan support?
Arsenal F.C.
Name 3 Non-financial aims of a business.
Can accept:
- Social Objectives
- Personal Satisfaction
- Challenge
- Independence
- Control
Is break-even measured in:
a) Pounds sold
b) Units sold
c) Great British Pounds
d) Any currency
e) all of the above
Answer: b)
In a business, what are the TWO times a business can suffer cash-flow problems?
When the business is starting up or when it experiences rapid growth.
List THREE examples of long-term finance.
Answers could include:
- Personal Savings
- Share capital
- Venture capital
- Bank Loan
- Retained profit
- Crowd funding
What is Mr Heffernan's favourite sport? Bonus: Name the specific team he follows.
Rugby League.
South Sydney Rabbitohs.
What does the acronym S.M.A.R.T stand for in relation to business goals?
S - Specific
M - Measurable
A - Agreed
R - Realistic
T - Time-Bound
Describe what a break-even point is.
It is the production level at which total production revenue equals total production costs.
What is meant by the term 'Insolvent'?
It is when the business cannot pay its own bills and becomes insolvent.
What is an advantage and disadvantage of crowdfunding?
Answers could include:
Adv:
- Form of market research
- Provides a source of funding
Disadv:
- The business needs to attract attention be interesting.
- Difficult to reach the funding target
How old is Mr Heffernan?
Old enough...
State the 3 reasons why business objectives differ between businesses.
- Different sectors
- Business size
- Business scale
State the correct formula for Profit.
Total revenue - Total costs
State the different between cash and profit.
Cash is the money that flows through the business, where profit is calculated to show the money that is left at the end of certain time period after all costs have been paid.
What is Share Capital and an advantage and disadvantage of this source of finance?
Money raised by shareholders through the sale of ordinary shares.
Adv:
- Share capital is a source of permanent capital.
- No dividends to pay if the business has a poor year.
Disadv:
- It dilutes control for the founders
- The business is vulnerable to takeover
If you ask Mr Heffenan "What time is it?" What response will you receive?
Time for you to get a watch.