LC Business cheat sheet

Business is a commercial activity that produces or distributes goods and services to satisfy human wants at a profit.

Three core inputs of any business: land/natural resources, labour, and capital; entrepreneurship organises them and bears risk.

Sectors by activity: primary (extraction), secondary (manufacturing), tertiary (services); quaternary covers knowledge and information work.

Forms of ownership: sole trader, partnership, private limited company, public limited company, cooperative; each differs in liability, continuity of existence, and access to capital.

Limited liability caps an owner's loss at the capital subscribed; unlimited liability exposes personal assets to business debts.

Break-even output = fixed costs / (selling price per unit - variable cost per unit).

Contribution per unit = selling price - variable cost; total contribution = contribution per unit x units sold.

Gross profit = revenue - cost of sales; net profit = gross profit - operating expenses.

Cash flow differs from profit: a profitable firm can fail if cash receipts lag payments, so liquidity must be managed separately.

Business is a commercial activity that produces or distributes goods and services to satisfy human wants at a profit.

Three core inputs of any business: land/natural resources, labour, and capital; entrepreneurship organises them and bears risk.

Sectors by activity: primary (extraction), secondary (manufacturing), tertiary (services); quaternary covers knowledge and information work.

Forms of ownership: sole trader, partnership, private limited company, public limited company, cooperative; each differs in liability, continuity of existence, and access to capital.

Limited liability caps an owner's loss at the capital subscribed; unlimited liability exposes personal assets to business debts.

Break-even output = fixed costs / (selling price per unit - variable cost per unit).

Contribution per unit = selling price - variable cost; total contribution = contribution per unit x units sold.

Gross profit = revenue - cost of sales; net profit = gross profit - operating expenses.

Cash flow differs from profit: a profitable firm can fail if cash receipts lag payments, so liquidity must be managed separately.