AQA business studies unit 2 revision

1. SOURCES OF
FINANCE
U N I T 2

2. RETAINED PROFITS
o no interest is needed to be paid
o No loss of control from new shareholders
o Doesn’t need to be repaid
For long term expansion
Advantages
Disadvantag
eso Not all businesses make enough profit to do this
o For slow business growth not very fast
o Not all businesses are profitable

3. SELLING UNWANTED ASSETS
To pay for expansion or to pay for debts
Disadvantages
Advantages
o No interest is needed to be paid
o No loss of control in the business
o The asset is no longer owned
o Might be needed at some point in the future

4. SELLING SHARES
To pay for long term expansion e.g. buying
another business
Advantages
Disadvantages
o No interest has to be paid
o Share capital does not have to be repaid
o Dividends will be expected by the shareholder
o May involve loss of control

5. BANK LOAN
For short or long – term purposes e.g. buying
machinery or to pay for increases in stock
Advantages
Disadvantages
o Overdraft is very flexible
o No loss of control
o Payed back over a fixed period of time
o Interest rates may be high
o Property is used as security
o Must be repaid

6. PRODUCTION
METHODS
U N I T 2

7. FLOW PRODUCTION
Large scale production where each stage is
carried out one after the other, continuously
on a production line
Where is it used?
oCoca Cola
oFactories

8. LEAN PRODUCTION
A production method that aims to use
fewer resources by using them more
efficiently

9. J.I.T. (JUST IN TIME)
Ordering supplies so that they arrive just when
they are needed and making goods only when
ordered by customers

10. KAIZEN
Continuous improvement and always looking
for a better way to do things and making them
more efficient

11. CELL PRODUCTION
Splitting the job into complete units rather than
one worker doing the same repetitive task a
group of workers all work on one product and
then move on

12. ECONOMIES AND
DISECONOMIES
OF SCALE
U N I T 2

13. ECONOMIES OF SCALE
The reasons why production costs of
each item fall as a firm expands

14. DISECONOMIES OF SCALE
The reasons why production costs of
each item rises as a firm expands

15. FINANCE
EQUATIONS
U N I T 2

16. GROSS PROFIT MARGIN AND NET
PROFIT MARGIN
Gross profit margin %
Net profit margin %
(Gross profit sales revenue) x 100
(Net profit sales revenue) x 100

17. CURRENT AND ACID TEST RATIO
Current test ratio
Acid test ratio
Current assets Current Liabilities
(Debtors + Cash) Current
Liabilities

18. BALANCE SHEET AND PROFIT AND
LOSS ACCOUNTS
Balance Sheet
Profit and Loss account
This lists the value of a company’s assets and
liabilities
This shows whether the business made a profit or loss
over the last period(usually a year), it is also known as
the income statement.

19. TRAINING OF
WORKERS
U N I T 2

20. Takes place when employees
receive training as they are
working at the place of work
ON THE JOB TRAINING
Advantages Disadvantages
o Employees are still
earning money and
working
o cheaper
o Not always a good
as off the job
o Having to train
other staff first

21. OFF THE JOB TRAINING
Takes place away from the job at
another place e.g. the businesses
training centre of college
Advantages Disadvantages
o Better quality
training
o They can then go
back and train
others
o The employees get
o Expensive
o Workers are off the
job for 1 day to
several days
depending on the
training

22. PEOPLE IN
BUSINESS
U N I T 2

23. ORGANISATIONAL STRUCTURES
The internal links between
managers and workers showing
lines of authority

24. TALL