3.5 Decision making to improve financial performance
Students should consider the following throughout this section of the specification:
- how developments in technology are affecting financial decision making and activities (eg crowd funding)
- market conditions and competition
- ethical and environmental influences on financial decisions
- how decisions in finance improve the competitiveness of the business
- the interrelationship between financial decisions and other functions.
Setting financial objectives
Updated
We've made some changes to the subject content in the table below. These changes affect first AS exams in 2024 and A-level exams in 2025. To find out what's changed, read our summary of changes. You can also visit our updated specification.
Content |
Additional information |
|---|---|
The value of setting financial objectives |
Financial objectives to include:
|
The distinction between cash flow and profit |
|
The distinction between gross profit, operating profit and profit for the year |
|
Revenue, costs and profit objectives |
|
Cash flow objectives |
|
Objectives for investment (capital expenditure) levels |
|
|
Capital structure objectives |
|
External and internal influences on financial objectives and decisions |
Analysing financial performance
Updated
We've made a change to the subject content in the table below. This change affects first AS exams in 2024 and A-level exams in 2025. To find out what's changed, read our summary of changes. You can also visit our updated specification.
Content |
Additional information |
|---|---|
How to construct and analyse budgets and cash flow forecasts |
Analysing budgets should include variance analysis and adverse and favourable variances. |
The value of budgeting |
|
How to construct and interpret break-even charts |
Break-even analysis should include:
|
How to calculate and illustrate on a break-even chart the effects of changes in price, output and cost |
|
The value of break-even analysis |
|
|
How to analyse profitability |
Analysing profitability should include the following
ratio analysis:
|
How to analyse timings of cash inflows and outflows |
Analysing timings of cash flow should include an understanding of payables and receivables. |
The use of data for financial decision making and planning |
Making financial decisions: sources of finance
Updated
We've made a change to the subject content in the table below. This change affects first AS exams in 2024 and A-level exams in 2025. To find out what's changed, read our summary of changes. You can also visit our updated specification.
Content |
Additional information |
|---|---|
Internal and external sources of finance |
Sources of finance should include:
|
Advantages and disadvantages of different sources of finance for short- and long-term uses |
Making financial decisions: improving cash flow and profits
Updated
We've made a change to the subject content in the table below. This change affects first AS exams in 2024 and A-level exams in 2025. To find out what's changed, read our summary of changes. You can also visit our updated specification.
Content |
Additional information |
|---|---|
Methods of improving cash flow |
Students should be able to assess ways of improving cash flow. |
Methods of improving profits and profitability |
Students should be able to assess ways of improving profitability. |
Difficulties improving cash flow and profit |
Download specification
Teaching from 2023
Teaching from 2015
