3.7

• 'current' is something we have or we owe in less than a year
• liquidity is how much cash is in the business plus how easily we can turn other assets into cash
• what we would want to know to assess financial position

  cashflow

  expenses

  costs of sales

  budgets

  profit margins

  debt

  ownership structure

  liquidity

  assets

  breakdown of revenue
• types of current assets

  cash

  cash equivalents

  stock

  receivables
• 4 types of stock

  raw materials

  components

  works in progress

  finished products
• problems with current ratio

  includes stock which will hold less value if it is unfinished or half used therefore we think we have more cash than we do
• fiscal policy is the decisions governments make about taxation and spending
• the impacts of elections on businesses

  creates uncertainty

  changes market dynamics

  changes regulatory environment
• monetary policy controls the amount and availability of money and credit in an economy and is controlled by the monetary policy committee
• monetary policy committee

  set interest rates

  control quantitative easing
• inflation is the overall increase in price of goods and services
• real terms are what you can actually buy with a given amount of money
• the impact on employment from inflation

  harder to employ as people want a higher salary

  may have to restructure which could include redundancies

  job market full of people from made redundant

  may not be as qualified or skilled

  quality of our product decreases

  overall efficiency decreases

  operating profit margin is narrowed
• impact of inflation on costs

  everything becomes more expensive

  however not every business will be affected the same as inflation is 'overall'

  some businesses will be less affected therefore there costs won's rise from it
• impacts on revenue from inflation

  fall massively as people have less money to spend

  however not for all businesses ie. premium supermarket goods would sees and increase in revenue as people buy these to gain small luxuries when they can no longer afford bigger ones
• impacts on competition from inflation

  market may shrink depending on market type

  lower levels of competition

  changes in intensity of competition
• a strategy changes the direction of travel
• external factors affecting objectives

  external environment

  investors' objectives

  competitive environment

  global markets

  external stakeholders
• an activist shareholder is some one who has a special interest and wants your business to do something differently
• distinction between strategy and tactics

  breadth

  scope

  ownership
• a strategy is a broad plan and applies to multiple areas

  a tactic is narrower and applies to one department
• corporate planning / strategic analysis

  the process of deciding the general direction of travel for the business and its aims
• short term factors affecting choice of mission

  location

  trends

  reaching a certain target audience
• long term factors affecting choice of mission

  competition

  legislation changes

  a forecasted recession
• internal factors affecting objectives

  mission statement

  leaders personal objectives and values

  performance

  organisational culture

  internal stakeholders
• the impact of choosing the right mission

  helps reputation

  allows customers to gain confidence

  differentiate from competitors

  can affect other stakeholders

  increase employee motivation if mission aligns with employee values

  competitive advantage
• strategy is planning how to reach a goal and tactics are actions to achieve the strategy
• Balance sheet

  Also reffered to statement of financial position

  Shows a businesses assets, liabilities and equity at a given period in time

  Details the accumulated wealth of a business

  Legally submitted to HMRC when you become a limited company
• Assets and liabilities

  Assets are things we own

  Liabilities are debts (owing) we have

  Current are rise held for a year or less

  Non current (fixed) are held for longer than a year
• Examples of types of assets

  Current assets: inventory, cash, cash equivalents, receivables

  No current assets: machinery, vehicles, buildings, land
• Examples of types of liabilities

  Current liabilities: overdraft, payables

  Non current liabilities: loans, mortgages
• Intangible assets are things like brand and brand image as it is something you can't physically touch but it has value
• Receivables are money we are owed but don't have yet. Payables are things we owe but haven't given yet
• Income statement

  showing income and expenditure over a period of time

  shows the profit or loss made
• liquidity is how much cash is in the business plus how easily we can turn other assets into cash
• Abuse of dominance

  Imposing unfair terms on others

  Excessive, predatory, discriminatory pricing

  Refusing to provide access to essential facilities

  Recquiring a buyer to also buy another product
• Merger control

  Mergers are reviewed by the competition and markets authority to consider whether or not the mergers will reduce competition or create a monopoly
• Areas of policy

  Enterprise

  Regulation

  Infrastructure

  International trade
• Anti competitive agreement

  Illegal

  Agreement and arrangements that prevent, restrict or distort competition and affect or may affect trade

  Things that unfairly trade and give an unfair advantage
• Examples of anti competitive agreements

  Fixed purchases or fixed selling prices

  Those that limit production, technical development or investment

  Those that affect share markets or sources of supply

  Applying conditions to one group as to put them at a disadvantage