Pearson Edexcel International A Level Business Unit 2.3.3 Managing Finance (3 complete lessons)

Pearson Edexcel International A Level Business Unit 2.3.3 Managing Finance (3 complete lessons)

1 Profit
a) Calculation of:
• gross profit
• operating profit
• profit for the year (net profit).
b) Ways to increase profits.
c) Statement of comprehensive income (profit and loss account):
• measuring profitability: calculation of gross profit margin, operating profit margin, and profit for the year (net profit) margin
• ways to improve profitability.
2 Liquidity
a) Distinction between profit and cash.
b) Statement of financial position (balance sheet):
• measuring liquidity: calculating current ratio and acid test ratio
• ways to improve liquidity, including assets, supplier credit terms, factoring, inventory JIT.
c) Working capital and its management: the importance of cash.
3 Business failure
a) Internal causes of business failure:
• poor management of cash flow
• overestimation of sales
• overtrading
• poor inventory control
• poor marketing
• poor quality.
b) External causes of business failure:
• market conditions
• competition
• economic
• exchange rates
• interest rates
• government regulations
• supplier problems
• natural phenomena.