Please enable JavaScript.
Coggle requires JavaScript to display documents.
How to measure a business size - Coggle Diagram
How to measure a business size
Capital employed
Is the amount of money that a business invested
Benefits
the value of all the business ssets added up shows how mich the business could be worth
This will give a value to the business about what is has invested and what be worth if sold
Drawbacks
Difficult to value assets accurately
Market share
Is the percentage of the amount of total sales that a business has in that market
Benefits
Provides a useful comparison againsy businesses in the same industry
Shows the amount of money that it´s spent in that maeket and thhat is comig to the business
Drawbacks
You can´t compare one business´market share with that of a business in another industry
That market is very small so if a business has a large share doesn´t mean it is a large business
This method don´t show the assets of other business
Number of outlets
It is the number of shops that a business run or owns
Benefits
It will give a geographic idea of the space that a business takes up
This can be used to compare with other business
Drawbacks
The outlets are not equal to saler or profits
a business can have many outlets not many customers
The outlets don´t show the amount of products sold or the value that have bee sold
doen´t shows the amount of outlets that a business owns or rents
doesn´t show the monetary value
Number of employees
Is the total number of people who work for the business
Benefits
It shows the scale on which the business operates
Drawbacks
Yoy con´t compare industries
Doesn´t matter the number of employees
Their skills and knowledge could be worth millions of dollars
Value of the business
Is the price that another business is willing to pay to own the business
Benefits
This can reflect the true worth in the market place
Businesses are bought so in a future their potencial will be worth a lot
Drawbacks
The measure can be inaccurate since a business can buy more than it´s worth
Ex: Instagram was bought for 1$ billion when it had yet to make profit
Value of output
Is the value of the products or services sold
also known as sales or turnover
Benefits
It shows how much the business is producing
shows how many poeple are willing to pay for the products
It can be easly compared with the competitors
Drawbacks
Revenues do not take into account the company's costs
Revenues are reduced when costs are taken away
If the economy is doing well the revenues will vary depending on it