What do you need to do to make financial decisions

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Reference no: EM132992474

BSBSMB406 Manage small business

Section: Knowledge Activity

Objective: To provide you with an opportunity to show you have the required knowledge for this unit. The answers to the following questions will enable you to demonstrate your knowledge of:
• Key features of benchmarking
• Key features of financial decision-making relevant to the business
• Key features of significant financial indicators
• Key purposes of financial reports
• Key features of balance sheet preparation and interpretation
• Key features of debt collection procedures or strategies
• Key features of profit and loss statement preparation and interpretation
• Key features of stock records and stock control relevant to the business.

Answer each question in as much detail as possible, considering your organisational requirements for each one. You may use Response Guide provided in Task 1.

1. What is benchmarking and its key features?

2. What do you need to do to make financial decisions in business?

3. What are financial indicators and what do the following provide you with?
• Operating cash flow
• Working capital
• Stock turnover ratio
• Debt turnover ratio
• Current ratio

4. Why are financial reports necessary?

5. How would you prepare balance sheets and what would you use these for?

6. What do debt collection procedures and strategies provide?

7. What are profit and loss statements and what do they include?

8. Why would you have stock records and stock control?

Reference no: EM132992474

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