Pearson Edexcel International A Level Business XBS11 and YBS11 (233) 2 Liquidity

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.