Key term
Eduqas A-Level Business A510QS
Enterprise, Business Plans and Location
Topic overviewEnterprise, entrepreneurs and SMEsNeeds, wants and spotting a business opportunityThe role of the entrepreneur in setting up and running a businessFinancial and non-financial motives of entrepreneursCharacteristics and skills of entrepreneursEntrepreneurs, SMEs and the sectors of the UK economyStakeholders and their interestsBusiness plans and sources of adviceChoosing a business location
Markets, Demand and Market Research
Topic overviewMarkets and competitionTypes of marketMarket size, market share and market trendsMarket segmentationMarket structures and degrees of competitionConsumer protectionDemand and the factors that shift itSupply and the factors that shift itEquilibrium price and shifts in the marketPrice and income elasticity of demandPrimary and secondary market researchQualitative and quantitative dataSampling and bias in market research
Business Structure and Sources of Finance
Topic overviewThe private sector and the public sectorAims of private sector businessesSole traders and partnershipsPrivate and public limited companiesUnlimited and limited liabilityChoosing a legal structureNot-for-profit organisationsInternal and personal sources of start-up financeBorrowing, equity and grants for a small business
Revenue, Costs and Break-Even
Topic overviewRevenue, costs and profitFixed, variable and semi-variable costsDirect costs, indirect costs and overheadsCalculating revenue, costs and profitContribution and its usesCalculating the break-even pointBreak-even charts and the margin of safetyWhat-if analysis of changes in costs and revenueThe usefulness and limits of break-even
Marketing and the Marketing Mix
Topic overviewThe purpose of marketing and market orientationThe marketing mix and the four PsProduct, brand, USP and differentiationThe product life cycleExtension strategiesThe product life cycle and cash flowThe Boston matrixPricing strategiesChoosing the right pricing strategyPromotion above the line and below the linePlace and distribution channelsThe marketing mix in different contextsNew technology in marketing
Financial Planning and Accounts
Topic overviewThe role of the finance departmentBudgets and the purpose of budgetingThe benefits and drawbacks of budgetsInternal sources of financeExternal sources of financeChoosing the right source of financeCash flow and cash flow forecastsConstructing and interpreting a cash flow forecastCash flow problems and how to improve cash flowThe income statement, gross profit and net profitGross and net profit margins
People in Organisations
Topic overviewThe role of the human resource departmentThe flexible workforceNew technology and changing working patternsWorkforce planningThe recruitment process, job analysis and job descriptionsInternal and external recruitmentMethods of selecting employeesMethods of trainingThe value of training to a businessAppraisal and its methodsMeasuring workforce performanceOrganisational structures and the chain of commandDelegation, empowerment and delayering
Motivation, Management and Employee Relations
Topic overviewMotivation and the benefits of a motivated workforceTaylor and scientific managementMayo and the Hawthorne studiesMaslow's hierarchy of needsHerzberg's two factor theoryExpectancy theories of Vroom, Porter and LawlerFinancial methods of motivationNon-financial methods of motivationManagement, management by objectives and Theory X and YLeadership and leadership stylesLeadership theories and choosing a styleEmployment rights, contracts and equal opportunitiesTrade unions, industrial conflict and dispute resolution
Operations Management
Topic overviewOperations management and added valueJob, batch and flow productionProductivity and how to raise itCapacity utilisationTechnology in operations: IT, CAD, CAM and roboticsLean production, kaizen and just-in-timeQuality control and quality assuranceTotal quality managementPurchasing, suppliers and methods of stock controlStock control diagrams and stock levelsInnovation, research and developmentInternal and external economies of scaleDiseconomies of scale and the survival of small firms
Data and Market Analysis
Topic overviewPresenting and interpreting business dataIndex numbers and comparing figures over timeCalculating price elasticity of demandInterpreting price elasticity and its effect on revenueIncome elasticity of demandSales forecasting and the reliability of a forecastMoving averages and time-series analysisCorrelation, scatter graphs and extrapolationQualitative forecasting techniques
Analysing Business Performance
Topic overviewBudget variances and how to calculate themAnalysing and evaluating budget variancesThe balance sheet and how it is constructedWorking capital, capital employed and depreciationLiquidity ratios: the current ratio and the acid testReturn on capital employed and gearingComparing accounts over time and between businessesEvaluating the financial position of a businessNon-financial measures of performance and vision statements
Aims, Objectives and Strategy
Topic overviewAims, objectives and SMART targetsMission and vision statementsStrategy, tactics and corporate plansSWOT analysisPorter's Five ForcesThe Ansoff matrixOrganic growthExternal growth: mergers and takeoversHorizontal and vertical integrationFranchising as a method of growthRationalisation and relocationOutsourcing production
Decision-Making and Investment Appraisal
Topic overviewTypes of business decisionScientific and intuitive decision-makingDecision trees: constructing and calculatingEvaluating decision tree analysisCritical path analysis: building the networkInterpreting and evaluating critical path analysisCost benefit analysisPayback and the average rate of returnDiscounted cash flow and net present valueChoosing between investmentsSpecial orders
Change and Risk Management
Topic overviewCauses of change in a businessInternal and external causes of changePlanned and unplanned changeEffects of change on a businessManaging change and Storey's four approachesResistance to change and how it is overcomeEvaluating change and its impact on stakeholdersTypes of risk a business facesRisk assessment, prevention and insuranceContingency planning and crisis management
PEST Factors and the External Environment
Topic overviewPolitical factors and the role of governmentTaxation and subsidiesFiscal and monetary policyEconomic growth, GDP and the business cycleInflation and how it is measuredInterest rates and exchange ratesUnemploymentDemographic changeSocial and cultural changeTechnological factors and automation
Ethical, Legal and Environmental Factors
Topic overviewBusiness ethics and ethical objectivesEthical issues facing a businessCorporate social responsibilityEthics, profitability and stakeholder viewsCompany law, intellectual property and pay lawEmployment, discrimination and health and safety lawConsumer, competition and data protection lawEnvironmental costs of business activityControlling environmental costs and business responses
International Trade, Globalisation and the European Union
Topic overviewInternational trade and why it happensFree trade and protectionismTrading blocs and the single marketEntering new international marketsGlobalisation and its causesThe effects of globalisation on businessStrategies for global growthGlocalisation and adapting to local marketsMultinational companiesThe European Union and the single European marketThe euro, the Eurozone and membership
Financial Planning and Accounts
Constructing and interpreting a cash flow forecast
- 3 things to know
- Component 1
Overview
Formula for net cash flow, formula for the closing balance and three typical cash inflows shown in a forecast.
What you need to know
Answer each one before you reveal it.
Your recallNot started
Key term
State the formula for the closing balance.
Numbers
A business has receipts of £20,000 and payments of £23,000 in March. Calculate net cash flow.
Questions from this subtopic
Each one with the model answer underneath.
- 1
State the formula for net cash flow.
Model answer
Net cash flow equals total cash inflows minus total cash outflows for the period. A negative figure means more money left than arrived.
- 2
State the formula for the closing balance.
Model answer
The closing balance equals the opening balance plus net cash flow. A closing balance below zero means the account is overdrawn.
- 3
A business has receipts of £20,000 and payments of £23,000 in March. Calculate net cash flow.
Model answer
Net cash flow is £20,000 − £23,000. Net cash flow for March is therefore −£3,000.
- 4
A business opens March with £5,000, receives £20,000 and pays out £23,000. Calculate the closing balance.
Model answer
Net cash flow is £20,000 − £23,000, which is −£3,000. Closing balance is £5,000 plus −£3,000, giving £2,000.
- 5
A firm opens April with £2,000, receives £18,000 and pays £15,500. Calculate net cash flow and the closing balance.
Model answer
Net cash flow is £18,000 − £15,500, giving £2,500. Closing balance is £2,000 plus £2,500, which comes to £4,500.
- 6
April closes with a balance of £4,500. State the opening balance for May and explain why.
Model answer
The opening balance for May is £4,500. Each month opens with the closing balance of the month before.
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