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What kind of business would you like to start?
This would be a question you would ask yourself if you were interested in starting a new business or opening up your own business. Depending on your interests or things you enjoy that would help narrow down what type of business you could start.
Why are customers interested in the success of the business?
If a customer places an order with a business, the customer would rather that business was so successful that they would not go into administration, but produce and deliver the products the customer had originally ordered.
Describe the five question approach to using financial ratios?
Leverage Financial Ratios Those financial ratios that show the percentage of a company's capital structure that is made up on debt or liabilities owed to external parties Liquidity Financial Ratios Those financial ratios that show the solvency of a company based on its assets versus its liabilities. In other words, it lets you know the resources available for a firm to use in order to pay its bills, keep the lights on, and pay the staff. Operating Financial Ratios These financial ratios show the efficiency of management and a company's operations in utilizing its capital. In the retail industry, this would include metrics such as inventory turnover,accounts receivable turnover, etc. Profitability Financial Ratios These financial ratios measure the return earned on a company's capital and the financial cushion relative to each dollar of sales. A firm that has high gross profit margins, for instance, is going to be much harder to put out of business when the economy turns down than one that has razor-thin margins. Likewise, a company with high returns on capital, even with smaller margins, is going to have a better chance of survival because it is so much more profitable relative to the shareholders' contributed investment. Solvency Financial Ratios These financial ratios tell you the chances of a company going bankrupt. There's really no elegant way to say that. The whole point of calculating them is to make sure that a company isn't in danger of going under anytime soon.
What are stakeholders?
A stakeholder in a business is anyone that has an interest of some kind in the business.In a school, some of the main stakeholders would be Pupils, Employees, the Government, the Local community. The pupils main interest is to get a good education, the employees would be interested in getting the best out of pupils and passing on knowledge. Things like traffic,litter an house prices may concern the local community so they would be interested in this as well as being interested in the benefits such as employment.Stakeholders include:Financers for a business would be interested in getting money back that they are owed with a good profit gained.Customers in a business are interested in benefiting from services/goods.Suppliers want to get a good price for their supplies but need to be at a competitive price to make customers buy from them. They want also to sell large quantities of stock with further orders.The local Community are concerned with the way the business affects them. e.g traffic problems could occur.Employees are interested in getting a good regular wage with job security.Owners want to make a profit to get a good return on their investment.
Effects of bad debts on bank's profitability?
Bad Debts usually have a negative effect on a banks balance sheet and profitability. Bad Debt stands for loans that are granted to customers who would not repay them back. These are losses for the bank and hence all this money features as loss in the banks accounts which in turn reduces the banks profitability.
