The ability of a business to maximise its profits. Or - A businesses ability to generate more revenue than expenses.
200
Name at least one source of internal finance for a business.
Funds provided by the owners (owners' equity) and funds generated by the business operations (retained earnings)
200
How many financial ratios are listed in the syllabus?
There are seven ratios
300
Define efficiency.
The ability of a business to minimise its costs and manage its assets so that maximum profit is achieved with the lowest possible level of assets.
300
What is owners' equity?
Funds supplied by the owners of the business.
400
The HSC Syllabus breaks each topic into R,I,P and S. What do these letters stand for?
Role, Influences, Processes and Strategies
400
Define liquidity
The extent to which a business can meet its financial commitments in the short term (less than 12 months).
400
Name at least one source of external finance.
Any funds provided by sources outside of the business including banks, other financial institutions, government and suppliers
500
The extent to which a business can meet its financial commitments in the long term (more than 12 months).
Solvency
500
What is the difference between debt and equity finance?
Debt finance is required to be paid back, often with interest. Equity is a contribution from an owner. There is not a legal requirement for equity finance to be repaid but the owner will expect a return on their investment through increased share price or the issue of a dividend.