Login

Welcome, Guest. Please login or register.

March 30, 2024, 02:23:12 am

Author Topic: How to get a Band 6 in Business Studies!  (Read 112130 times)  Share 

0 Members and 1 Guest are viewing this topic.

Deng

  • Trendsetter
  • **
  • Posts: 136
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #75 on: October 25, 2016, 06:22:56 pm »
+1
Any suggestions why the answer is A? Not sure why it can't be B or C

The question says the best strategy to increase gross profit, whilst minimising expenses and/or reducing fix costs will reduce costs, cost centres are more direct and targeted to certain parts e.g COGS for a business. This makes it a 'better strategy' since GP is calculated by Revenue - COGS.

Hope i cleared up some confusion.
English Advanced -89
Legal Studies - 90
Business Studies -92
Economics - 92
Mathematics - 88

isaacdelatorre

  • HSC Lecturer
  • Forum Obsessive
  • ***
  • Posts: 303
  • Respect: +74
Re: How to get a Band 6 in Business Studies!
« Reply #76 on: October 25, 2016, 06:29:30 pm »
+1
Any suggestions why the answer is A? Not sure why it can't be B or C

Hey Kevin,

So the question asks for a strategy to increase gross profit. We know that Gross Profit = Sales - Cost of Good Sold;
So to increase Gross profit we either increase sales or decrease COGS.

B - fixed costs - is wrong because a fixed cost is like rent, insurance etc. These are expenses but they are not part of COGS.

C - minimise expenses is your distractor; but be aware that it says expenses which normally means selling, administrative or financial expenses and not necessarily COGS which is it's own expense. Expense minimisation refers mainly to reducing unnecessary costs; not necessarily COGS thus it is quite broad and not as correct as A

D - sale and lease back - is wrong as this is a working capital strategy to improve liquidity and not profitability

A - Use cost centres is most correct is it would enable the firm to isolate where exactly the cost in COGS is coming from so that it can be addressed - i.e. might be supplier, might be inflation, might be hedging - without doing this the firm cannot minimise COGS and thus can't maximise Gross Profit

Although, this was a confusing question; and in a rush I most probably would have chosen C - sorry Deng, didn't see you already replied!!
« Last Edit: October 25, 2016, 06:41:38 pm by isaacdelatorre »
HSC 2016:   ATAR: 99+
Mathematics - 97    Economics - 96     Legal Studies - 95     Advanced English - 91    Business Studies - 95

2017: B Commerce/B Law @ UNSW  

kevin217

  • Forum Regular
  • **
  • Posts: 86
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #77 on: October 25, 2016, 06:39:52 pm »
0
Hey Kevin,

So the question asks for a strategy to increase gross profit. We know that Gross Profit = Sales - Cost of Good Sold;
So to increase Gross profit we either increase sales or decrease COGS.

B is wrong because a fixed cost is like rent, insurance etc. These are expenses but they are not part of COGS
C - minimise expenses is your distractor; but be aware that it says expenses which normally means selling, administrative or financial expenses and not COGS which is it's own expense. Expense minimisation refers mainly to reducing unnecessary costs; not necessarily COGS

D - sale and lease back - is wrong as this is a working capital strategy to improve liquidity and not profitability

A - Use cost centres is most correct is it would enable the firm to isolate where exactly the cost in COGS is coming from so that it can be addressed - i.e. might be supplier, might be labour, might be hedging - without doing this the firm cannot minimise COGS and thus can't maximise Gross Profit

Although, this was a confusing question; and in a rush I most probably would have chosen C
Wow, thanks for your explanation, made it more simpler than it really is. Good catch on cost centres targeting specific expenses related to COGS.

justdoit

  • Trailblazer
  • *
  • Posts: 38
  • Respect: +1
Re: How to get a Band 6 in Business Studies!
« Reply #78 on: October 25, 2016, 08:04:07 pm »
0
Heyy,

Can anyone please help me with the limitations of reports?

isaacdelatorre

  • HSC Lecturer
  • Forum Obsessive
  • ***
  • Posts: 303
  • Respect: +74
Re: How to get a Band 6 in Business Studies!
« Reply #79 on: October 25, 2016, 08:11:32 pm »
0
Heyy,

Can anyone please help me with the limitations of reports?

Hey justdoit,

That's kind of a broad question; what part are you not getting? Is there a specific limitation? or are you not sure on what how they are relevant?
HSC 2016:   ATAR: 99+
Mathematics - 97    Economics - 96     Legal Studies - 95     Advanced English - 91    Business Studies - 95

2017: B Commerce/B Law @ UNSW  

kawther

  • Trailblazer
  • *
  • Posts: 42
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #80 on: October 25, 2016, 08:35:58 pm »
0
Hey Guys,

I was wondering how the global strategy for Human Resources "cost, skills, supply" is a strategy?? Like I understand finding cheaper labour who possess the required skill is key for any business, but how does supply come in?

Thank you!


isaacdelatorre

  • HSC Lecturer
  • Forum Obsessive
  • ***
  • Posts: 303
  • Respect: +74
Re: How to get a Band 6 in Business Studies!
« Reply #81 on: October 25, 2016, 08:43:43 pm »
0
Hey Guys,

I was wondering how the global strategy for Human Resources "cost, skills, supply" is a strategy?? Like I understand finding cheaper labour who possess the required skill is key for any business, but how does supply come in?

Thank you!

Hey Kawther,

To be honest, it isn't really a strategy; mainly the ability to look globally for labour is the strategy. The supply part refers to where the pool of applicants/labour is from - domestic or overseas --> Australia might have an undersupply domestically so have to look overseas. On the other hand, a place like China or India might have an oversupply of labour who are willing to work at a cheaper price in foreign subsidiaries. Further, the abundant supply of unskilled, semi skilled and skilled labour has seen Australia allowing more migrants as well as some firms bringing in workers from overseas - e.g. Gina Reinhart

Hope this helps
HSC 2016:   ATAR: 99+
Mathematics - 97    Economics - 96     Legal Studies - 95     Advanced English - 91    Business Studies - 95

2017: B Commerce/B Law @ UNSW  

Rikahs

  • Forum Regular
  • **
  • Posts: 56
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #82 on: October 25, 2016, 09:16:39 pm »
0
Hi can someone please explain what hedging and derivatives are and do?

Thanks
Adv Eng
Mathematics
Mathematics Ext 1
Business Stds
Chemistry
Physics

hermansia12

  • Trendsetter
  • **
  • Posts: 135
  • Respect: +14
Re: How to get a Band 6 in Business Studies!
« Reply #83 on: October 25, 2016, 09:41:11 pm »
0
Hi can someone please explain what hedging and derivatives are and do?

Thanks

Hi there!

To my knowledge, this is what I understand hedging and derivatives to be:

Hedging is any investment into an asset to reduce its risk of volatile price changes. Its sorta similar to an insurance but because the asset is less risky, there are less gains from the asset. (Known as the Risk-Reward Tradeoff)

Derivatives are securities that are dependent on other underlying assets such as interest rates or exchange rates.

Hope this helps :)
Economics: 91
English Advanced: 90
Studies of Religion 1: 46
Mathematics Extension 1: 88
Mathematics Extension 2: 73

ATAR: 96.05

Currently studying: Bachelor of Engineering (Civil) (Hons)/Bachelor of Commerce at UNSW

Deng

  • Trendsetter
  • **
  • Posts: 136
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #84 on: October 25, 2016, 10:10:58 pm »
0
Adding to Hermansia, there are various forms of derivatives such as options, forward exchange and swap contract.

Using examples an option refers to an agreement between two parties which gives one party the right but not the obligation to purchase. Qantas uses options to hedge their fuel, where they have the right to purchase fuel but not the obligation to purchase if the price of fuel is cheaper otherwise. This allows Qantas to reduce their costs of operations since they are an airline and inherently use a lot of fuel.

Forward exchange is simply buying a currency in the future at a predetermined price ( helps remove volatility and risk )

A swap contract is an agreement to exchange currency in spot market with agreement to reverse transaction in the future
and is done when business needs to raise finance in country they are not well known in (can be forced to pay higher interest rate). From the textbook, if an Australian business needs Yen, it will ask a Japanses business to purchase the Yen for them ( at a cheaper price, they know the market better ), and the Australian business will then purchase Australian dollars for the Japanese country. They will swap the two currencies which helps both businesses alter their exposure to exchange rate fluctuations
English Advanced -89
Legal Studies - 90
Business Studies -92
Economics - 92
Mathematics - 88

justdoit

  • Trailblazer
  • *
  • Posts: 38
  • Respect: +1
Re: How to get a Band 6 in Business Studies!
« Reply #85 on: October 26, 2016, 07:02:28 am »
0
Valuing assest, Debt repayments and Timing issues :)

kawther

  • Trailblazer
  • *
  • Posts: 42
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #86 on: October 26, 2016, 08:35:51 am »
0
Hey Kawther,

To be honest, it isn't really a strategy; mainly the ability to look globally for labour is the strategy. The supply part refers to where the pool of applicants/labour is from - domestic or overseas --> Australia might have an undersupply domestically so have to look overseas. On the other hand, a place like China or India might have an oversupply of labour who are willing to work at a cheaper price in foreign subsidiaries. Further, the abundant supply of unskilled, semi skilled and skilled labour has seen Australia allowing more migrants as well as some firms bringing in workers from overseas - e.g. Gina Reinhart

Hope this helps

THANK YOU SO MUCH! Really appreciate your help  :)

justdoit

  • Trailblazer
  • *
  • Posts: 38
  • Respect: +1
Re: How to get a Band 6 in Business Studies!
« Reply #87 on: October 26, 2016, 09:03:23 am »
0
Hey,

Whats the difference between coaching and mentoring

Rikahs

  • Forum Regular
  • **
  • Posts: 56
  • Respect: 0
Re: How to get a Band 6 in Business Studies!
« Reply #88 on: October 26, 2016, 10:23:26 am »
0
Hey,

Whats the difference between coaching and mentoring

Scroll up to post #73
Adv Eng
Mathematics
Mathematics Ext 1
Business Stds
Chemistry
Physics

isaacdelatorre

  • HSC Lecturer
  • Forum Obsessive
  • ***
  • Posts: 303
  • Respect: +74
Re: How to get a Band 6 in Business Studies!
« Reply #89 on: October 26, 2016, 10:31:06 am »
0
Valuing assest, Debt repayments and Timing issues :)

Hey justdoit!

So limitations on financial reports are issues that you should be aware about that can distort the true figures or give a more accurate representation of a business' position.

Valuing assets:
Valuing assets is a limitation to financial reports/statements. This is because it is sometimes hard to estimate how much an asset is worth - creating inaccuracies.

Sometimes, assets are recorded using its historical cost or cost when the asset was purchased. This becomes an inaccurate representation of the assets worth over time as depreciation occurs, in which the value of the asset decreasing over time as it becomes obsolete. If the historical cost is used on a balance sheet for example a year after it was purchased, this would distort and overstate the value of total asset. - thus limitation to financial resources as it is prone to inaccuracies.
Note - this also occurs when non-current assets like land appreciate.

This is also a limitation since intangible assets such as goodwill, patents, brand names which are listed on balance sheets are hard to calculate since there is no monetary value attached to them. Thus the valuing of assets can be overstated or understated = limitation of financial reports since it may be inaccurate or misleading.

Debt repayments:
Any form of debt or liability primarily on balance sheet (can be P&L or cash flow) is normally considered bad. However, in order to make an informed judgement over the business' solvency, we need to know things like:
  • How long the business has had the debt
  • Capacity of the business to pay it's debt
  • Adequacy of provisions or methods the business has for recovery of debt
  • Provisions in place for doubtful debts
  • Debt repayments under another financial period
  • When the debts are due - monthly repayments

E.G A loan of $5000 on a balance sheet might seem bad, but if the repayments are only $20 a month and the business earns $2000 in sales a month; then it doesn't seem like a large amount and won't affect liquidity that much.

Timing Issues:
This revolves around the "matching principle" in which whenever revenue is recorded, there should be matching expenses for that revenue. I.e. any profit generated should have a cost associated - $500 in sales should be attributed to some sort of cost in buying the products.
This especially becomes an issue when the cost  is recorded in the previous financial year, but the product is sold in the following year - this causes an understatement of profits in the first year and hence lower tax paid. This becomes a major issue  if this practice were
widespread in a business where sales were hundreds of millions a year.  inflows of cash and the payment of debt can be easily manipulated in financial reports. Thus, most large businesses publish six-monthly reports so that the potential to mislead needs to be carefully considered.
Note that this practice can be used for any kind of income or cost including long service leave, holiday payments etc.

Also, Deng has an excellent explanation on the difference between mentoring and coaching above :)
Hope this clears things up!!
HSC 2016:   ATAR: 99+
Mathematics - 97    Economics - 96     Legal Studies - 95     Advanced English - 91    Business Studies - 95

2017: B Commerce/B Law @ UNSW