Summary
Summary Unit 7: Strategic Performance - New AQA Business A-Level 2016/17
All Year 13 unit 7.2-7.8 notes in poster format All specification concepts included
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
3 reviews
By: xessin • 2 year ago
By: natashadarmoo • 4 year ago
By: ehammond17306 • 5 year ago
Content preview
Strategic PositionUNIT 7
Balance sheets: Financial position of a company on a particular day Income Statement: Shows revenue and expenses in a year. Financial Ratios – comparing two sets of linked data
Assets – items owned by the business Gross Profit = revenue - cost of sales Profitability Ratios- compare profits with a firms size
Current Assets – short-term items that should have turned into Operating Profit = gross profit - operating expenses (operating, gross, profit for year margin & ROCE).
cash within a year (i.e. stock, receivables and cash…) Profit pre-tax = operating profit + one off profits - other costs
Bad debts are defaults on receivables and shouldn’t be included Profit for the year = Profit pre-tax – corporation tax Return on Capital = Operating Profit X100
as assets but as an expense on an income statement Retained Profit = Profit for the year – dividends Employed Total Equity + Non-Current Liabilities
Non-Current Assets –Resources that are repeatedly used during Revenues £100,000
production (depreciate overtime included) – land, machines… Compares money made by business with money put into a
Cost of Sales (£40,000)
Intangible Assets: Value of goodwill (a brand image and patents) Gross Profit £60,000
business. Compared with Bank of England interest rate.
– not on balance sheet due to hard assessment.
Operating Expenses (£15,000) Liquidity Ratio- ability to pay current liabilities (current ratio)
Liabilities – debts owed by the business
Operating Profit £45,000
Current Liabilities – debts scheduled to be repaid within a year
Other Income £5,000 Current Ratio= Current Assets ÷ Current Liabilities
(overdraft, payables, due dividends and unpaid tax…)
Other Expenses (£15,000)
Non-Current Liabilities – debts that will be repaid over several (Value of 1.5-2 is ideal as it takes into account unsold stock)
years (loans, debentures…) Profit Pre-Tax £35,000
If a firm has more current liability than current assets (< 1) it is
Equity – takes 2 forms: Tax (£7,000) insolvent. A firm should reduce stock or improve credit terms
Share capital - shareholder funds provided to the business Profit for the Year £28,000
Reserves – increase in the value of a company often caused by Gearing Ratio- shows the ability of capital structure to pay
Dividends (£12,000)
shareholders allowing dividends to be kept. long-term debts, takeout new loans and a firm’s vulnerability
Retained Profit £16,000
to changes in interest rates.
Inventories £20,000 Accounting information: Non-Current Liabilities
Receivables £10,000 Capital expenditure allocation –money needed for future Gearing = Total Equity + Non-Current Liabilities X100
Cash £5,000
non-current assets
Total Current Assets £35,000 Borrowing is determined by asset value (security for bank). A
Stock valued at cost or net realisable value (value of stock in
Property £100,000 high gearing (over 50%) means a business is vulnerable to
Machinery £25,000 current state)- whichever is the lowest of the two.
Depreciation included giving a true valuation. Depreciation is changes in interest rates and reduces dividends. Low gearing
Total Non-Current Assets £125,000
an expense on the income statement of under 25% means the business isn’t taking a risk to expand
Overdraft (£2,000)
Payables (£30,000) Value & Limitations of Balance Sheets and Income Statements Financial Efficiency Ratios- assess efficiency of asset and
Unpaid Tax (£1,000) Stakeholders compare finances over time (trend analysis), short-term liability management.
Total Current Liabilities (£33,000) between departments (intra-firm), to an industry standard or
Bank Loan (£55,000) with competitors (inter-firm) so that: Shareholders/lenders can Cost of Sales
Inventory Turnover =
Total Non-Current Liabilities (£55,000) assess risk/return of an investment, employees can assess job Cost of Average Stock Held
Net Assets £72,000 security, suppliers can assess liquidity and customers can assess Shows how many times a business sold all its stock in a year.
Working Capital (Net Current Assets) £2,000 future survival (for after sale services) Holding less or selling more stock improves this ratio
Share Capital £60,000
Reserves £12,000
Payables
They ignore: skills, quality, market share, productivity, Payables Days = Cost of Sales X365
Total Equity £72,000 sustainability and PESTLE.
Net Assets = Total Assets – Total Liabilities = Total Equity PLCs publicise accounts, competitors can exploit weaknesses. Average number of days a business takes to pay suppliers.
Working Capital =Current Assets–Current Liabilities =Liquidity Balance sheets are a fixed point in the past and don’t include
Capital Employed = Total Equity + Non-Current Liabilities intangible assets, but may include bad debts – misleading. Receivables
Receivables Days = X365
Assets Employed = Non-Current Assets + Working Capital Income statements are distorted by inflation and seasonal Sales Revenue
Assets Employed = Capital Employed demand if not done over a 12 month period. Average number of days a business waits to be paid its credit.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SKing. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £2.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53340 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now