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Theme 2 – Managing Business Activities
Knowledge organiser
Name:
Learner ID:
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Raising finance
2.1.1 Internal financeTerm or Concept
Definition 1 Advantage of this type of finance
1 Disadvantage of this type of finance
Which types of business ownership would this type of
finance be suitable for?Owners capital
Retained profit
Sale of assets
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2.1.2 External financeTerm or Concept
Definition 1 Advantage of this type of finance
1 Disadvantage of this type of finance
Which types of business ownership would this type of
finance be suitable for?Sources of finance:
Family and friends
Banks
Peer-to peer lending
Business angels
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Crowd funding
Other businesses
Term or Concept
Definition 1 Advantage of this type of finance
1 Disadvantage of this type of finance
Which types of business ownership would this type of
finance be suitable for?Methods of finance:
Loans
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Share capital
Venture capital
Overdrafts
Leasing
Trade credit
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Grants
2.1.3 LiabilityTerm or Concept
Definition 1 Advantage of this type of liability 1 Disadvantage of this type of liability
Which types of business ownership have this type of liability?
Limited liability
Term or Concept
Definition 1 Disadvantage of this type of liability Which types of business ownership have this type of liability?
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Limited liability
2.1.4 PlanningTerm or Concept
Definition 1 Advantage of a business plan in trying to obtain finance
1 Disadvantage of business plan in trying to obtain finance
Business plan
Term or Concept
Definition 1 Advantage of using a cash flow forecast
1 Disadvantage of using a cash flow forecast
Cash flow forecast
*you will need to practise the calculations
2.2 Financial Planning2.2.1 Sales forecasting
Term or Definition 1 Advantage of a using sales 1 Disadvantage of a using sales 1 Disadvantage of a using sales
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Concept forecasting when planning? forecasting when planning? forecasting when planning?Sales forecasting
Term or Concept
Explain why this factor could cause an increase in sales from what was forecasted?
Explain why this factor could cause an decrease in sales from what was forecasted
Consumer trends
Term or Concept
Explain why this factor could cause an increase in sales from what was forecasted?
Explain why this factor could cause an decrease in sales from what was forecasted
Economic variables
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Term or Concept
Explain why this factor could cause an increase in sales from what was forecasted?
Explain why this factor could cause an decrease in sales from what was forecasted
Actions of competitors
2.2.2 Sales, revenues and costsWhat are the formulae for the following:
Sales revenue
Sales volume
Calculation of total fixed costs
Calculation of total variable costs
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Calculation of total costs
2.2.3 Break evenWhat are the formulae for the following:
Contribution
Using contribution to calculate the break-even point
Margin of safety
(e) Interpretation of break-even chartsAnnotate the following break-even chart by explaining what each arrow identifies on the break-even chart
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Term or Concept 1 limitation of break even analysis 2nd limitation of break even analysis 3rd limitation of break even analysisBreak even analysis
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2.2.4 BudgetsTerm or Concept Definition
Budgets
Term or Concept
Definition 1st Advantage of this type of finance
1 Disadvantage of this type of finance
Which types of situation would this type of budget
suitTypes of budgets
Historical figures
Term or Concept
Definition 1 Advantage of this type of finance
1 Disadvantage of this type of finance
Which types of situation would this type of budget
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suitTypes of budgets
Zero based
Term or Concept
Definition What does the term favourable variance mean?
What does the term favourable adverse mean?
Why is variance analysis carried out?
Variance analysis
1st difficulty of budgeting 2nd difficulty of budgeting 3rd difficulty of budgeting
2.3 Managing finance2.3.1 ProfitWhat are the formulae for the following:
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Gross profit -Operating profit
Profit for the year (net profit)
Gross profit margin Operating profit (net profit) margin
Identify and explain a method to improve profitability
Identify and explain a method to improve profitability
Identify and explain a method to improve profitability
Identify a difference between cash and profit Identify a difference between cash and profit
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2.3.2 LiquidityWhat are the formulae for the following:
Current ratio -Acid test ratio
Identify and explain a method to improve liquidity
Identify and explain a method to improve liquidity Identify and explain a method to improve liquidity
Complete the spider diagram to include the following: Definition of the term working capital 2 ways in which you can manage the working capital cycle
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o 2 advantages of using each methodo 2 disadvantages of using each method
Identify one reason for the importance of cash Identify a second reason for the importance of cash
2.3.3 Business failure
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Term or Concept Definition as an internal factor that can cause business failure
A financial example of this A non-financial example of this
Poor efficiency
Marketing
Term or Concept Definition as an internal factor that can cause business failure
A financial example of this A non-financial example of this
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Economic recession
Strengthening pound
2.4 Resource management2.4.1 Production, productivity and efficiency
Term or Definition 1 Advantage of this type of 1 Disadvantage of this type of Examples of types of business
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Concept production production that would use this methodMethods of production Job
Batch
Flow
Cell
What is the formulae for productivity?
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Complete the spider diagram by identifying and explaining the factors that lead to increased productivity within a business
Complete he table below
Identify a method to increase productivity
How does this method increase competiveness?
1 Advantage of this method 1 Disadvantage of this type of this method
Factors influencing efficiency and how
productivity
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Explain the following statement“Efficiency is maximised when units of output are produced at average total cost”
Identify a method to increase efficiency
1 Advantage of this method 1 Disadvantage of this type of this method
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2.4.2 Capacity utilisationWhat is the formulae for capacity utilisation?
Identify and explain an implication of under-utilisation of capacity How could a business improve this?
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Identify and explain an implication of under-utilisation of capacity How could a business improve this?
Identify and explain an implication of over-utilisation of capacity How could a business improve this?
Identify and explain an implication of over-utilisation of capacity How could a business improve this?
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Identify and explain an implication of over-utilisation of capacity How could a business improve this?
2.4.3 Stock controlIdentify what each of the arrows represent
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Identify and explain an implication of poor stock control How could a business improve this?
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Identify and explain an implication of poor stock control How could a business improve this?
Term or Concept Definition 1 Advantage of this method 1 Disadvantage of this method Methods of stock control
Just in time (JIT) management of stock
Waste minimisation
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Competitive advantage from lean production
2.4.4 Quality managementTerm or Concept Definition 1 Advantage of this method 1 Disadvantage of this method
Methods of quality management
Quality control
Quality assurance
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Quality circles
Total quality management
Continuous improvement
Identify and explain a competitive advantage of quality Identify and explain a competitive advantage of quality
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2.5.1 Economic influencesTerm or Concept Definition 1 positive effect on businesses 1 negative effect on businesses
The effect on businesses of changes in:
inflation (the rate of inflation, the Consumer PricesIndex)
Make sure you include the definition of Consumer Price Index
The effect on businesses of changes in:
Interest rates
Make sure you include the definition of Consumer Price Index
The effect on businesses of changes in:
Make sure you include the impact of appreciation and depreciation
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exchange rates (appreciation, depreciation)
The effect on businesses of changes in:
Taxation and government spending
The effect on businesses of changes in:
The business cycle
Identify 1 effect on economic uncertainty on the business environment Identify 1 effect on economic uncertainty on the business environment
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2.5.2 LegislationWhat is one effect on businesses consumer protection?
What is one effect on businesses employee protection?
What is one effect on businesses environmental protection?
What is one effect on businesses competition policy?
What is one effect on businesses health and safety?
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2.5.3 The competitive environment
What is the difference between competition and market size?