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.

Pearson Edexcel International A Level Business Unit 2.3.1. Planning a business and raising finance(5 complete lessons) 1 Planning a) Content of a business plan. b) Relevance and uses of a business plan. 2 Internal finance a) Owner’s capital: personal savings. b) Retained profit. c) Sale of assets. 3 External finance a) Sources of finance and their suitability for different circumstances: • family and friends • banks • peer-to-peer funding • business angels • crowd funding • other businesses. b) Methods of finance and their suitability for different circumstances: • loans • share capital • venture capital • overdrafts • leasing • trade credit • grants. 4 Forms of business a) Sole trader, partnership and private limited company (Ltd). b) Franchising, social enterprise, lifestyle businesses, online businesses. c) Growth to public limited companies (plc) and stock market flotation. 5 Liability a) Implications of limited and unlimited liability, including advantages and disadvantages. b) Finance appropriate for limited and unlimited liability businesses.

Pearson Edexcel International A Level Business Unit 2.3.2 Financial Planning (5 complete lessons) 1 Sales, revenue and costs a) Calculation of sales volume and sales revenue. b) Calculation of fixed, variable costs, total costs and average costs. c) Ways of improving sales volumes and sales revenues. 2 Sales forecasting a) Purpose of sales forecasts. b) Factors affecting sales forecasts: • consumer trends • economic variables • actions of competitors. c) Difficulties of sales forecasting. 3 Break-even a) Contribution: selling price − variable cost per unit. b) Break-even point: • total fixed costs + total variable costs = total revenue. c) Using contribution to calculate the break-even point. d) Margin of safety. e) Interpretation of break-even charts. f) Limitations of break-even analysis. 4 Cash flow a) Construction and interpretation of simple cash-flow forecasts. b) Use and limitations of cash-flow forecasts. 5 Budgets a) Purposes of budgets. b) Types of budget: • based on historical figures • zero based. c) Variance analysis. d) Difficulties of budgeting