AS Business₇₁₃₁

The value of setting financial objectives

Financial objectives to include:

• the concept of a return on investment
• revenue, costs and profit objectives
• cash flow objectives.

The distinction between cash flow and profit

The distinction between gross profit, operating profit and profit for the year

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:

• break-even output
• margin of safety
• contribution per unit
• total contribution.

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

• gross profit
• profit from operations
• profit for the year.

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

Internal and external sources of finance

Sources of finance should include:

• debt factoring
• overdrafts
• retained profits
• share capital
• loans
• venture capital
• crowd funding.

Advantages and disadvantages of different sources of finance for short- and long-term uses

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 profits and profitability.

Difficulties improving cash flow and profit