International
AS-level Business
,Content
AS Level
1. Business & Environment
2. People in Organisations
3. Marketing
4. Operations &
Project Management
5. Finance & Accounting
, Business Equations
1) Business & Environment
Added Value = Price — Cost
Revenue = Price x Nº of Sales
Cost of Sales = Variable Cost per Unit x Quanitity
Market Cap = Share Price x Nº of Shares
Market Share = (Sales Revenue ÷ Market Size) x 100
2) People In Organisations
Labour Turnover = (Nº of Employees Leaving ÷ Average Nº of Employees) x 100
3) Marketing
PED = % Δ Q ÷ % Δ P
4) Operations & Project Management
Labour Productivity = Output Per Time Period ÷ Nº of Workers Per Time Period
5) Finance & Accounting
Working Capital = Current Assets — Current Liabilties
Interest Charge Per year = Outstanding Loan x (APR ÷ 100)
Costs
Average Cost = Total Costs ÷ Output
Marginal Cost = ∆ Cost ÷ ∆ Quantity
Total Costs = Fixed Costs + Variable Costs
Unit Cost = Total Costs ÷ Nº of Units
Break-Even
Break-Even Point = Fixed Costs ÷ (Selling Price — Variable Cost Per Unit)
Margin of Safety = Sales Volume — Break-Even Point
Income Statement
Gross Profit = Revenue — Variable Costs
Operating Profit = Gross Profit — Fixed Costs
Net Profit = Operating Profit — Interest or Exceptional Costs
Net Profit After Tax = Net Profit — Tax
Retained Earnings = Net Profit After Tax — Dividends
Statement of Financial Position
Net Assets = Total Assets — Total Liabilities
Profitability Ratios
Gross Profit Margin = (Gross Profit ÷ Revenue) x 100
Operating Profit Margin = (Operating Profit ÷ Revenue) x 100
Net Profit Margin = (Net Profit ÷ Revenue) x 100
Liquidity Ratios
Current Ratio = Current Assets ÷ Current Liabilities
Acid Test Ratio = (Current Assets — Stock) ÷ Current Liabilities
, 1) Business & Environment
Nature of Business Activity
The Purpose of Business Activity
· Business: any organisation that uses resources to meet the needs of customers by providing a
product or service that they demand, this involves creating and adding value to resources.
+ Without business activity we would entirely depend on the goods we could make or grow
ourselves
Goods & Services
· Goods: Items that satisfy human wants
· The sale of a good involves the transfer of ownership from the business to the customer
· Goods may be tangible (physical) items that are made and sold to other businesses or customers
+ However goods are becoming increasingly intangible, or digital
· Services: activities that people or businesses carry out for the customer
Production Process
· Businesses need a production process
· The transformation process describes what happens inside the business
Inputs -> Transformation Process -> Outputs
Factors of Production (CELL)
· Capital: Man-made recourse
· Enterprise: Entrepreneurs organise factors of production and take risks
· Labour: Human input into the production process
· Land: Natural resources available for production
Sectors of the Economy
· Primary Sector: Extraction of natural resources
· Secondary Sector: Production of finished goods and components
· Tertiary Sector: Providing services to consumers and businesses
· Quaternary Sector: Providing information
Why Enterprise is Important to the Economy
· Job creation — over 400,00 new businesses are started each year
· Stimulates investment and innovation through risk-taking
· Entrepreneurs enable an economy to respond to changing global conditions
· Businesses pay substantial taxes and encourage competition in markets
The Concept of Adding Value
· Adding Value: The process of converting inputs into outputs to create a product or service that
is worth more than it costs to produce or deliver
· To survive and prosper firms must ‘add value’ to the inputs they have used so that customers are
prepared to pay more than the cost of producing it (Added Value = Price — Cost)
· ‘Added Value’ is the difference between a firm’s cost of materials and revenue from its sales
· N.B. It does not represent ‘profit’ in the strict sense
· Adding value is closely linked to the concept of synergy
· Synergy: The creation of a whole that is greater than the sum of its constituents (1 + 1 = 3)
AS-level Business
,Content
AS Level
1. Business & Environment
2. People in Organisations
3. Marketing
4. Operations &
Project Management
5. Finance & Accounting
, Business Equations
1) Business & Environment
Added Value = Price — Cost
Revenue = Price x Nº of Sales
Cost of Sales = Variable Cost per Unit x Quanitity
Market Cap = Share Price x Nº of Shares
Market Share = (Sales Revenue ÷ Market Size) x 100
2) People In Organisations
Labour Turnover = (Nº of Employees Leaving ÷ Average Nº of Employees) x 100
3) Marketing
PED = % Δ Q ÷ % Δ P
4) Operations & Project Management
Labour Productivity = Output Per Time Period ÷ Nº of Workers Per Time Period
5) Finance & Accounting
Working Capital = Current Assets — Current Liabilties
Interest Charge Per year = Outstanding Loan x (APR ÷ 100)
Costs
Average Cost = Total Costs ÷ Output
Marginal Cost = ∆ Cost ÷ ∆ Quantity
Total Costs = Fixed Costs + Variable Costs
Unit Cost = Total Costs ÷ Nº of Units
Break-Even
Break-Even Point = Fixed Costs ÷ (Selling Price — Variable Cost Per Unit)
Margin of Safety = Sales Volume — Break-Even Point
Income Statement
Gross Profit = Revenue — Variable Costs
Operating Profit = Gross Profit — Fixed Costs
Net Profit = Operating Profit — Interest or Exceptional Costs
Net Profit After Tax = Net Profit — Tax
Retained Earnings = Net Profit After Tax — Dividends
Statement of Financial Position
Net Assets = Total Assets — Total Liabilities
Profitability Ratios
Gross Profit Margin = (Gross Profit ÷ Revenue) x 100
Operating Profit Margin = (Operating Profit ÷ Revenue) x 100
Net Profit Margin = (Net Profit ÷ Revenue) x 100
Liquidity Ratios
Current Ratio = Current Assets ÷ Current Liabilities
Acid Test Ratio = (Current Assets — Stock) ÷ Current Liabilities
, 1) Business & Environment
Nature of Business Activity
The Purpose of Business Activity
· Business: any organisation that uses resources to meet the needs of customers by providing a
product or service that they demand, this involves creating and adding value to resources.
+ Without business activity we would entirely depend on the goods we could make or grow
ourselves
Goods & Services
· Goods: Items that satisfy human wants
· The sale of a good involves the transfer of ownership from the business to the customer
· Goods may be tangible (physical) items that are made and sold to other businesses or customers
+ However goods are becoming increasingly intangible, or digital
· Services: activities that people or businesses carry out for the customer
Production Process
· Businesses need a production process
· The transformation process describes what happens inside the business
Inputs -> Transformation Process -> Outputs
Factors of Production (CELL)
· Capital: Man-made recourse
· Enterprise: Entrepreneurs organise factors of production and take risks
· Labour: Human input into the production process
· Land: Natural resources available for production
Sectors of the Economy
· Primary Sector: Extraction of natural resources
· Secondary Sector: Production of finished goods and components
· Tertiary Sector: Providing services to consumers and businesses
· Quaternary Sector: Providing information
Why Enterprise is Important to the Economy
· Job creation — over 400,00 new businesses are started each year
· Stimulates investment and innovation through risk-taking
· Entrepreneurs enable an economy to respond to changing global conditions
· Businesses pay substantial taxes and encourage competition in markets
The Concept of Adding Value
· Adding Value: The process of converting inputs into outputs to create a product or service that
is worth more than it costs to produce or deliver
· To survive and prosper firms must ‘add value’ to the inputs they have used so that customers are
prepared to pay more than the cost of producing it (Added Value = Price — Cost)
· ‘Added Value’ is the difference between a firm’s cost of materials and revenue from its sales
· N.B. It does not represent ‘profit’ in the strict sense
· Adding value is closely linked to the concept of synergy
· Synergy: The creation of a whole that is greater than the sum of its constituents (1 + 1 = 3)
