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3.5 / assesing competitivness - Coggle Diagram
3.5 / assesing competitivness
Interpretation of Financial Statements
SOCI - statement of comprehensive income
This used to be called the profit and loss account
It shows the income and expenditure of a business over a period of time
Stakeholder interest in the statement of
comprehensive income
evaluate the performance of a business
share holders - interest in profit and dividends received
employee - profitability = higher wage
Managers - performance data / areas of or for improvement
suppliers - determine level of trade credit
govt - how much tax is payable
SOFP - statement of financial positions
financial information required to draw conclusions about the liquidity of the business measured on one day of the year
Liquidity is the ability of a business to meet its short term commitments
owned and owes account
stakeholder interests of SOFP
shareholders - determines value of business, calculates working capital and how there investments have been used
managers - determines financial position, asses working capital if its low/at a good level/high
suppliers - measure risk when offering trade credit periods
employees - is company stable or are jobs at risk, improved or worsen performance, how much are executives paid
govt - how much tax are they paying
Ratio Analysis
on one note page
Human Resources
managing employees through
labour retention
measures proportion of remaining employees during a period of time
Staff not leaving in period / Average number of staff in period × 100
higher labour retention = few staff leaving
absenteeism
measures proportion of staff that were absent during a period of time
Total Absence in the period / possible total x 100
high levels cause problems such as
Absence due to illness requires sick pay to be paid
Hiring temporary staff to cover for those absent increases costs
Output is likely to be temporarily reduced if staff are key to production process
Other sta may become demotivated if they have to constantly cover for absent workers
A wider culture of absenteeism may develop
labour turnover
proportion of employees leaving a business within a time period
Number of Staff Leaving in Period / Average Number of Staff × 100
rise can signal internal HR problems like
poor management - workers loosing commitment
poor recruitment and selection - bad workforce
low wage levels for staff
problems caused by a rise
increase recruitment costs
increased induction costs
lower productivity as new workers settle into new roles
labour productivity
measure of output per employee
Output per period / Number of employees per period
want to increase level
higher labour productivity
lower labour costs per unit
improved efficency
competetive edge
.
Human resources strategies to improve
employee performance
raise staff productivity and reduce staff turnover & absenteeism
offer financial rewards - less likely to want to leave and produce higher output
increase pay rates
profit share schemes
bonuses and commission
performance related pay
attendance rewards
loyalty bonuses
offering employees shares in the company
Rewarding senior executives and managers with shares
may increase their commitment to achieving objectives
Employees who own shares in the business may work harder and take less time o as they have a financial stake in the success of the business
Consultation
Consultation involves managers obtaining the views of
employees when making decisions
Workers are likely to feel more involved within the business and may be less likely to take days off work or leave the business
Empowerment
Empowerment involves providing employees with autonomy and responsibility to make their own decisions and work on their own behalf
Workers must be properly trained and equipped with the
necessary resources to be properly empowered
