Advantages and Disadvantages of Capital and Labour Intensive Production

In Business, production generally has two techniques; Labour Intensive Production aims to use a large workforce to complete work by hand, this usually employs a lot of people to create a product. Some products may be seen to have more value if they were manufactured by hand. Capital Intensive Production aims to create a product using as little people as possible, the process could be entirely or partially automated and can sometimes be used to assist individuals in manufacture, such as a custom robotic factory worker that moves parts of a product to assembly, or a robot that screws in… Continue reading Advantages and Disadvantages of Capital and Labour Intensive Production

Liquidity Ratios

There are different ratios that are used in business. A current ratio is a formula that shows the relationship between what the business has payable, and what they have as liquidity. It may be easier to think of current liability as current payables. Formulas for Liquidity Ratios The formula for the current ratio is Current assets / current liabilities = current ratio The current ratio shows if the company has enough potential cash to pay any debts that they owe. The current ratio is usually based off of a year and should be above or between 1-1.25, below this number… Continue reading Liquidity Ratios

The Working Capital Cycle

The working capital cycle is a proportion of a businesses working capital that is used to allow a business to operate normally, it is the funds required by a business in order to continue trading efficiently. Without a business being able to calculate how much working capital it needs in order to operate, then it may find it hard to continue to function, the working capital cycle involves anything from inventory and supplies, to production and storage. Without proper working capital, it could lead to business failure. The Working Capital Cycle The working cycle has limited use as a single… Continue reading The Working Capital Cycle

Factors Affecting Sales Forecasts

Sales Forecasts are charts and graphs, equations and educated predictions that allow businesses to predict future sales with a degree of accuracy. Consumer Trends – People being proud of bargains and discounts. sales forecasts become harder to predict when consumerism changes. Economic Variables – Recessions, Booms and Recovery. Competitors Actions – loss leaders and pricing strategy may try to undercut you. Digital Music for example, as become harder to predict as people have found new ways to obtain it illegally. Fashion Items have an unpredictable life span. Businesses use a range of forecasting tools to make forecasts No single technique is… Continue reading Factors Affecting Sales Forecasts