KASNEB CICT cheat sheet

Data vs information: data is raw unprocessed facts (figures, symbols); information is data processed into a meaningful, decision-useful form. Processing = input → process → output → storage.

SDLC phases in order: requirements gathering, systems analysis, design, development, testing, implementation, maintenance. Waterfall is sequential; prototyping and agile iterate.

OSI model, 7 to 1: Application, Presentation, Session, Transport, Network, Data Link, Physical. TCP/IP maps to 4 layers; TCP is connection-oriented and reliable, UDP is connectionless.

Primary storage is volatile RAM/ROM; secondary storage is non-volatile (HDD, SSD, magnetic tape). RAM loses contents on power loss; ROM retains firmware.

Backup types: full copies all data; incremental copies changes since last backup of any type; differential copies changes since the last full backup. Restore needs full + latest differential, or full + all incrementals.

Database keys: primary key uniquely identifies a row and cannot be null; foreign key references a primary key in another table and enforces referential integrity; candidate key is any minimal unique identifier.

Normalisation: 1NF removes repeating groups; 2NF removes partial dependency on part of a composite key; 3NF removes transitive dependency on non-key attributes.

Control totals for batch input: hash total (meaningless sum such as account numbers), financial total, record count, and batch sequence checks; these detect missing or duplicated records.

Malware classes: virus attaches to a host file and needs execution; worm self-replicates across networks; trojan disguises as legitimate software; ransomware encrypts data for extortion.

Accounting equation: Assets = Capital + Liabilities. Every transaction keeps it in balance via double entry - each debit has an equal credit.

Debit/credit rules: debit increases assets and expenses, decreases liabilities, capital and income; credit does the reverse.

Trial balance extracts debit and credit balances; it proves arithmetic equality only. It will not reveal errors of principle, omission, original entry, compensating errors or complete reversal.

Suspense account: opened when a trial balance disagrees, holding the difference until errors are located and corrected; it is closed once all corrections are posted.

Bank reconciliation: adjusted cash book balance = uncredited lodgements, unpresented cheques, bank charges, standing orders, direct debits and dishonoured cheques reconciled against the bank statement balance.

Depreciation methods: straight line = (Cost − Residual value) ÷ Useful life; reducing balance = fixed percentage × Net book value. Depreciation is an expense, not a cash flow.

Accruals (matching) concept: income and expenses are recognised in the period they are earned or incurred, not when cash moves. Prepayments are expenses paid in advance; accruals are expenses incurred but unpaid.

Cost classification: direct costs (materials, labour, expenses) form prime cost; adding production overheads gives production cost; adding administration, selling and distribution overheads gives total cost.

Gross profit = Sales − Cost of sales; Net profit = Gross profit + Other income − Expenses. Inventory valuation at the lower of cost and net realisable value (IAS 2).

Time value of money: FV = PV(1 + r)^n for annual compounding; PV = FV ÷ (1 + r)^n. More frequent compounding raises the effective annual rate: EAR = (1 + r/m)^m − 1.

NPV = Σ [CFt ÷ (1 + r)^t] − Initial outlay. Accept a project when NPV > 0; between mutually exclusive projects, choose the higher NPV.

IRR is the discount rate at which NPV = 0; accept when IRR exceeds the cost of capital. IRR can give multiple answers with non-conventional cash flows, so NPV is preferred.

Payback period = time to recover the initial outlay from cumulative cash flows; ignores cash flows after payback and the time value of money. ARR = average annual profit ÷ average investment.

WACC = (E ÷ V) × Ke + (D ÷ V) × Kd × (1 − t), where V = E + D and t is the corporate tax rate; interest is tax-deductible, dividends are not.

CAPM: Ke = Rf + β(Rm − Rf). Beta measures systematic (market) risk, which cannot be diversified away; unsystematic risk can be removed by diversification.

Working capital = current assets − current liabilities. Current ratio = current assets ÷ current liabilities; quick (acid-test) ratio excludes inventory and prepayments.

Dividend valuation: Po = D1 ÷ (Ke − g) using the Gordon growth model, where g is the constant growth rate and D1 = D0(1 + g).

Separation of duties: authorisation, custody of assets, recording and reconciliation should be assigned to different people; no single person should control a transaction end to end.

Corporate governance: the board sets strategy and oversees management; the audit committee of independent non-executive directors oversees external audit, internal controls and financial reporting.

Agency problem: directors (agents) may pursue self-interest over shareholders' (principals') interests; mitigated by independent directors, performance-linked pay, audit and disclosure.

Internal control components (COSO): control environment, risk assessment, control activities, information and communication, and monitoring.

Management functions: planning, organising, staffing, directing and controlling. Span of control is the number of subordinates reporting to one manager; a wide span needs fewer management levels.

Organisational structures: functional groups by specialism; divisional by product or market; matrix combines both and creates dual reporting lines and role conflict.

Risk response options: avoid, reduce (mitigate), transfer (e.g. insurance) and accept. Inherent risk is before controls; residual risk remains after controls.

Audit: internal audit reports to the audit committee and reviews controls; external audit gives an independent opinion on whether financial statements are true and fair. Auditors detect fraud only where it causes material misstatement.

Network topologies: star uses a central hub and fails if the hub fails; bus shares one backbone; ring passes data in a loop; mesh gives redundancy at high cabling cost.

Cloud service models: IaaS supplies virtualised infrastructure, PaaS supplies a development platform, SaaS supplies finished applications. Responsibility for the application shifts from customer to provider as you move IaaS → PaaS → SaaS.

Cyber threats: phishing is deceptive email or messages to harvest credentials; pharming redirects users to fake sites via DNS or hosts manipulation; social engineering manipulates people rather than systems.

Encryption: symmetric uses one shared key and is fast (e.g. AES); asymmetric uses a public/private key pair and supports digital signatures and key exchange (e.g. RSA).

Firewalls filter traffic by rules; IDS detects and alerts on suspicious activity; IPS detects and blocks. Antivirus uses signature and heuristic detection.

Disaster recovery metrics: RTO is the maximum acceptable downtime; RPO is the maximum acceptable data loss. A hot site is fully equipped, warm partially, cold is an empty shell.

E-commerce models: B2B, B2C, C2C and B2G. EDI is the computer-to-computer exchange of standard business documents between trading partners.

System implementation approaches: direct (big bang) is cheap but risky; parallel runs both systems and is safest but costly; phased and pilot introduce the system in stages.

Books of original entry: sales day book records credit sales; purchases day book credit purchases; returns inwards/outwards day books record returns; cash book records receipts and payments; journal records the rest.

Control accounts: sales ledger control account balance should equal the total of individual debtors' balances; a difference indicates errors or omissions in the ledgers.

Inventory valuation (IAS 2): cost includes purchase price, import duties, transport and conversion costs; excludes abnormal waste and selling costs. Use FIFO or weighted average; LIFO is not permitted under IFRS.

Bad debt is written off as an expense; a doubtful debt allowance is an estimate recognised as an expense (increase) or income (decrease). Allowance = receivables × estimated percentage.

Capital vs revenue expenditure: capital expenditure acquires or improves a non-current asset and is capitalised; revenue expenditure covers day-to-day running and is expensed.

Partnership: profit shared per the partnership agreement; in absence of agreement, profits and losses are shared equally, no interest on capital or drawings, and no salaries.

Non-current assets: cost includes purchase price plus directly attributable costs. Carrying amount = cost − accumulated depreciation − accumulated impairment.

Financial statements: Statement of profit or loss shows performance over a period; statement of financial position shows assets, liabilities and equity at a date (IAS 1).

Simple interest = P × r × t; compound interest = P[(1 + r)^t − 1]. Simple interest is charged only on the original principal.

Future value of an annuity: FV = A × [((1 + r)^n − 1) ÷ r]; present value of an annuity: PV = A × [(1 − (1 + r)^−n) ÷ r].

Bond price = present value of coupon payments plus present value of redemption value. Bond prices fall when market interest rates rise; the relationship is inverse.

Dividend yield = dividend per share ÷ market price per share; earnings per share = profit attributable to ordinary shareholders ÷ weighted average number of ordinary shares.

Gearing = debt ÷ (debt + equity), or debt ÷ equity. High gearing raises financial risk and the required return on equity and makes earnings volatile.

Break-even point in units = fixed costs ÷ contribution per unit; contribution = selling price − variable cost per unit. Margin of safety = (actual sales − break-even sales) ÷ actual sales.

Interest rate parity links spot and forward rates to the interest differential between two currencies; purchasing power parity links exchange rates to relative inflation.

Capital rationing: where funds are limited, rank divisible projects by profitability index (PV of cash inflows ÷ initial investment) and select the highest until the budget is exhausted.

Leadership styles: autocratic (leader decides), democratic (consultative), laissez-faire (group decides). Situational leadership matches style to follower maturity and task needs.

Motivation theory: Maslow's hierarchy runs physiological, safety, social, esteem, self-actualisation; Herzberg separates hygiene factors (pay, conditions) from motivators (achievement, recognition).

Delegation transfers authority, not accountability; the delegator remains answerable for the outcome. Authority must match responsibility.

Budgeting: a budget is a quantified financial plan. Top-down is imposed by senior management; bottom-up (participative) uses departmental input and improves commitment.

Variance analysis: adverse variance reduces profit (cost higher or revenue lower than budget); favourable variance increases profit. Investigate by exception and materiality.

Decision-making steps: identify the problem, gather information, generate alternatives, evaluate, select, implement, then monitor and review.

Stakeholder theory: shareholders are one group among many (employees, customers, suppliers, government, community); governance must balance competing interests.

Corporate social responsibility covers economic, legal, ethical and discretionary responsibilities; sustainability reporting discloses environmental and social performance alongside financial results.

Number systems: binary base 2, octal base 8, decimal base 10, hexadecimal base 16. One hex digit equals 4 bits; one byte = 8 bits; 1 KB = 1024 bytes.

File organisation: sequential requires reading from the start; direct (random) allows access by address; indexed sequential combines sequential order with an index for direct access.

SDLC testing levels: unit tests individual modules; integration tests combined modules; system tests the whole system; user acceptance testing confirms fitness for business purpose.

Input validation checks: range, format, length, presence, check digit and data type. Validation confirms data is acceptable; verification confirms data was copied accurately.

Data protection principles: collect for specified lawful purposes, keep accurate and secure, retain no longer than necessary, and give data subjects rights of access and correction.

E-business infrastructure: intranet is internal to an organisation; extranet extends access to trusted partners; internet is public. VPN creates a secure tunnel over a public network.

Spreadsheet risks: hard-coded values, broken formula ranges, circular references and uncontrolled version changes; controls include cell protection, audit trails and independent review.

Operating system functions: process management, memory management, file management, device management and providing a user interface.

IAS 7 cash flow statement: operating activities (cash from trading), investing activities (acquisition/disposal of non-current assets and investments), financing activities (share issues, loans, dividends).

Indirect method starts with profit before tax, adds back non-cash items (depreciation, impairment), adjusts for working capital changes, then deducts tax and interest paid.

IAS 16: depreciation begins when an asset is available for use and continues until derecognition, even if idle. Review useful life, residual value and method at least annually.

IFRS 15 five steps: identify the contract, identify performance obligations, determine the transaction price, allocate it to obligations, recognise revenue when each obligation is satisfied.

IAS 37: recognise a provision where a present obligation exists, an outflow is probable and the amount can be reliably estimated; a contingent liability is only disclosed.

IAS 38: research costs are expensed; development costs are capitalised only if technical feasibility, intention and ability to complete, probable future benefits and reliable measurement are demonstrated.

Consolidation: parent and subsidiary results are combined; intra-group sales, balances and unrealised profit are eliminated; non-controlling interest is presented separately in equity.

Ratio analysis: ROCE = operating profit ÷ capital employed; gross margin = gross profit ÷ revenue; inventory turnover = cost of sales ÷ average inventory; receivable days = receivables ÷ credit sales × 365.

Risk and return: expected return = Σ (probability × return). Variance = Σ probability × (return − expected return)^2; standard deviation is its square root and measures total risk.

Portfolio risk falls as more assets are combined because unsystematic risk offsets; systematic risk remains and is measured by beta.

Cost of equity (dividend growth): Ke = (D1 ÷ Po) + g. Cost of debt is the yield to redemption, adjusted by (1 − tax rate) for the tax shield on interest.

Leverage: operating gearing = contribution ÷ operating profit; financial gearing = debt ÷ equity. Combined gearing magnifies the effect of sales changes on earnings per share.

Cash operating cycle = inventory days + receivable days − payable days. A shorter cycle reduces the financing needed for working capital.

Investment appraisal cash flows: use incremental after-tax cash flows, include opportunity costs and working capital, exclude sunk costs, financing costs and accounting depreciation.

Sources of finance: equity (ordinary shares, retained earnings) has no fixed return; debt (loans, bonds) carries fixed interest and security. Short-term sources include overdrafts and trade credit.

Dividend policy: residual theory pays dividends only from earnings left after funding positive-NPV projects; clientele theory holds that investors prefer a stable, predictable dividend stream.

Board committees: audit committee (financial reporting, external and internal audit), remuneration committee (director pay), nomination committee (board appointments and succession).

Internal control limitations: human error, collusion between staff, management override and cost-benefit constraints mean controls give reasonable, not absolute, assurance.

Segregation in IT: duties of systems development, operations, data control and security administration should be separated; programmers must not have access to live data.

Corporate governance codes generally require disclosure of compliance or explanation of non-compliance (comply-or-explain), board balance with independent directors, and separation of chair and CEO roles.

Performance appraisal methods: ranking, rating scales, critical incident, management by objectives (MBO) and 360-degree feedback from peers, subordinates and supervisors.

Communication process: sender encodes a message, selects a channel, receiver decodes it, and feedback confirms understanding; noise is any barrier that distorts the message.

Change management: unfreeze, change, refreeze (Lewin). Resistance is reduced by communication, participation, support and negotiation rather than coercion.

Corporate failure indicators: declining margins, rising gearing, liquidity shortages, over-trading, poor cash forecasting and dominant ineffective leadership.

Data warehouse stores integrated, subject-oriented, time-variant, non-volatile data for analysis; data mart is a subset; data mining finds patterns in large datasets.

System development approaches: waterfall (sequential, fixed requirements), prototyping (iterative user feedback), RAD (rapid with user involvement), and off-the-shelf packages (buy vs build).

Feasibility study dimensions: technical, economic, legal, operational and schedule feasibility. It precedes detailed design and can stop a project.

Changeover costs and risk: direct changeover is cheapest and riskiest; parallel running is costliest and safest; phased and pilot changeover balance cost and risk.

Audit trail records who did what and when; it supports accountability, error tracing and fraud investigation. Log files must be protected from alteration.

Physical access controls: locks, biometrics, CCTV, security guards and visitor logs; logical access controls: passwords, access rights tables, biometrics and multi-factor authentication.

Spreadsheet and database query tools: sorting orders records; filtering selects records meeting criteria; a query retrieves data using conditions; a report presents formatted output.

Business continuity plan covers risk assessment, business impact analysis, recovery strategies, testing and maintenance; it differs from a disaster recovery plan, which focuses on IT restoration.

Manufacturing account: prime cost + production overheads + opening work in progress − closing work in progress = production cost of goods completed.

Overhead absorption rate = budgeted overheads ÷ budgeted activity level (labour hours, machine hours or units). Under-absorption occurs when actual overheads exceed absorbed overheads.

Marginal costing values inventory at variable production cost only; fixed production overheads are treated as period costs. Absorption costing includes fixed production overheads in product cost.

Process costing: normal loss is expected and its scrap value reduces cost; abnormal loss is valued at full cost and written off; abnormal gain is credited to the process account.

Standard costing variances: material price = (standard price − actual price) × actual quantity; material usage = (standard quantity − actual quantity) × standard price.

Labour variances: rate = (standard rate − actual rate) × actual hours paid; efficiency = (standard hours for actual output − actual hours worked) × standard rate.

Relevant costing: include future incremental cash flows; exclude sunk costs, committed fixed costs and non-cash items. Opportunity cost is the benefit forgone from the next best alternative.

Limiting factor: when one resource restricts output, rank products by contribution per unit of the limiting factor and allocate that resource accordingly.

Money market instruments (treasury bills, commercial paper, certificates of deposit) are short-term and highly liquid; capital market instruments (shares, bonds) are long-term.

Financial intermediation: banks transform short-term deposits into long-term loans (maturity transformation), pool risk, reduce information asymmetry and provide payment services.

Interest rate risk: a borrower fearing rising rates can fix via an interest rate swap or forward rate agreement; a lender fearing falling rates can do the same in reverse.

Efficient market hypothesis: weak form (prices reflect past prices), semi-strong (all public information), strong (all information including private). Most evidence supports semi-strong efficiency.

Exchange rate quotation: direct quote gives domestic currency per unit of foreign currency; indirect quote gives foreign currency per unit of domestic. Forward rate = spot × (1 + interest rate of quote currency) ÷ (1 + interest rate of base currency).

Venture capital funds high-risk start-ups for equity; a business angel is a wealthy individual investor. Leasing finances use of an asset without ownership; a finance lease transfers substantially all risks and rewards.

Capital structure: Modigliani–Miller without tax says firm value is independent of gearing; with tax, the tax shield on debt raises value, offset by financial distress costs.

Ratios for lenders: interest cover = operating profit ÷ interest; gearing and cash flow cover indicate ability to service and repay debt.

Strategic planning levels: corporate (what businesses to be in), business (how to compete), functional (marketing, operations, finance) and operational (day-to-day) planning.

SWOT analyses internal strengths and weaknesses against external opportunities and threats; PESTLE analyses political, economic, social, technological, legal and environmental factors.

Porter's five forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers and bargaining power of suppliers.

Ansoff matrix: market penetration (existing product/market), market development, product development and diversification (highest risk).

Decision rules: maximax chooses the best of the best outcomes (risk-seeking); maximin chooses the best of the worst (risk-averse); minimax regret minimises the maximum opportunity loss.

Organisational culture types (Handy): power, role, task and person cultures. A role culture relies on rules and procedures and suits stable environments.

Corporate social responsibility reporting covers environmental impact, employee welfare, community engagement and ethical supply chains, and is disclosed in the annual report or a sustainability report.

Risk management process: identify risks, assess likelihood and impact, evaluate against risk appetite, treat, then monitor and review.

Spreadsheet formulas: absolute reference $A$1 stays fixed when copied; relative reference A1 changes; mixed reference fixes only the row or column. =SUM(A1:A10) totals a range.

Error values: #DIV/0! divides by zero or an empty cell; #REF! references a deleted cell; #VALUE! uses wrong data type; #NAME? uses an unrecognised name.

IF(logical_test, value_if_true, value_if_false) returns one of two results; VLOOKUP looks up a value in the first column of a range and returns a value from a specified column.

Database management system functions: data definition, data manipulation, data control (security and integrity), concurrency control and recovery.

SQL basics: SELECT columns FROM table WHERE condition; GROUP BY aggregates rows; HAVING filters groups; ORDER BY sorts output.

Data integrity controls: entity integrity (no null primary key), referential integrity (foreign keys match), domain integrity (valid values) and user-defined integrity.

Network devices: router forwards between networks using IP addresses; switch forwards within a LAN using MAC addresses; hub broadcasts to all ports; modem converts signals for transmission.

Operating system types: batch, real-time, multi-user, distributed and embedded. Real-time systems must respond within a guaranteed time limit.

Manufacturing account: prime cost + production overheads + opening work in progress − closing work in progress = production cost of goods completed.

Overhead absorption rate = budgeted overheads ÷ budgeted activity level (labour hours, machine hours or units). Under-absorption occurs when actual overheads exceed absorbed overheads.

Marginal costing values inventory at variable production cost only; fixed production overheads are period costs. Absorption costing includes fixed production overheads in product cost.

Process costing: normal loss is expected and its scrap value reduces cost; abnormal loss is valued at full cost and written off; abnormal gain is credited to the process account.

Standard costing variances: material price = (standard price − actual price) × actual quantity; material usage = (standard quantity − actual quantity) × standard price.

Labour variances: rate = (standard rate − actual rate) × actual hours paid; efficiency = (standard hours for actual output − actual hours worked) × standard rate.

Relevant costing: include future incremental cash flows; exclude sunk costs, committed fixed costs and non-cash items. Opportunity cost is the benefit forgone from the next best alternative.

Limiting factor: when one resource restricts output, rank products by contribution per unit of the limiting factor and allocate that resource accordingly.

Money market instruments (treasury bills, commercial paper, certificates of deposit) are short-term and highly liquid; capital market instruments (shares, bonds) are long-term.

Financial intermediation: banks transform short-term deposits into long-term loans (maturity transformation), pool risk, reduce information asymmetry and provide payment services.

Interest rate risk: a borrower fearing rising rates can fix via an interest rate swap or forward rate agreement; a lender fearing falling rates can do the same in reverse.

Efficient market hypothesis: weak form (prices reflect past prices), semi-strong (all public information), strong (all information including private). Most evidence supports semi-strong efficiency.

Exchange rate quotation: direct quote gives domestic currency per unit of foreign currency; indirect quote gives foreign currency per unit of domestic. Forward rate = spot × (1 + interest rate of quote currency) ÷ (1 + interest rate of base currency).

Venture capital funds high-risk start-ups for equity; a business angel is a wealthy individual investor. Leasing finances use of an asset without ownership; a finance lease transfers substantially all risks and rewards.

Capital structure: Modigliani–Miller without tax says firm value is independent of gearing; with tax, the tax shield on debt raises value, offset by financial distress costs.

Ratios for lenders: interest cover = operating profit ÷ interest; gearing and cash flow cover indicate ability to service and repay debt.

Strategic planning levels: corporate (what businesses to be in), business (how to compete), functional (marketing, operations, finance) and operational (day-to-day) planning.

SWOT analyses internal strengths and weaknesses against external opportunities and threats; PESTLE analyses political, economic, social, technological, legal and environmental factors.

Porter's five forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers and bargaining power of suppliers.

Ansoff matrix: market penetration (existing product/market), market development, product development and diversification (highest risk).

Decision rules: maximax chooses the best of the best outcomes (risk-seeking); maximin chooses the best of the worst (risk-averse); minimax regret minimises the maximum opportunity loss.

Organisational culture types (Handy): power, role, task and person cultures. A role culture relies on rules and procedures and suits stable environments.

Corporate social responsibility reporting covers environmental impact, employee welfare, community engagement and ethical supply chains, and is disclosed in the annual report or a sustainability report.

Risk management process: identify risks, assess likelihood and impact, evaluate against risk appetite, treat, then monitor and review.

Spreadsheet formulas: absolute reference $A$1 stays fixed when copied; relative reference A1 changes; mixed reference fixes only the row or column. =SUM(A1:A10) totals a range.

Error values: #DIV/0! divides by zero or an empty cell; #REF! references a deleted cell; #VALUE! uses wrong data type; #NAME? uses an unrecognised name.

IF(logical_test, value_if_true, value_if_false) returns one of two results; VLOOKUP looks up a value in the first column of a range and returns a value from a specified column.

Database management system functions: data definition, data manipulation, data control (security and integrity), concurrency control and recovery.

SQL basics: SELECT columns FROM table WHERE condition; GROUP BY aggregates rows; HAVING filters groups; ORDER BY sorts output.

Data integrity controls: entity integrity (no null primary key), referential integrity (foreign keys match), domain integrity (valid values) and user-defined integrity.

Network devices: router forwards between networks using IP addresses; switch forwards within a LAN using MAC addresses; hub broadcasts to all ports; modem converts signals for transmission.

Operating system types: batch, real-time, multi-user, distributed and embedded. Real-time systems must respond within a guaranteed time limit.

Manufacturing account: prime cost + production overheads + opening work in progress − closing work in progress = production cost of goods completed.

Overhead absorption rate = budgeted overheads ÷ budgeted activity level (labour hours, machine hours or units). Under-absorption occurs when actual overheads exceed absorbed overheads.

Marginal costing values inventory at variable production cost only; fixed production overheads are period costs. Absorption costing includes fixed production overheads in product cost.

Process costing: normal loss is expected and its scrap value reduces cost; abnormal loss is valued at full cost and written off; abnormal gain is credited to the process account.

Standard costing variances: material price = (standard price − actual price) × actual quantity; material usage = (standard quantity − actual quantity) × standard price.

Labour variances: rate = (standard rate − actual rate) × actual hours paid; efficiency = (standard hours for actual output − actual hours worked) × standard rate.

Relevant costing: include future incremental cash flows; exclude sunk costs, committed fixed costs and non-cash items. Opportunity cost is the benefit forgone from the next best alternative.

Limiting factor: when one resource restricts output, rank products by contribution per unit of the limiting factor and allocate that resource accordingly.

Money market instruments (treasury bills, commercial paper, certificates of deposit) are short-term and highly liquid; capital market instruments (shares, bonds) are long-term.

Financial intermediation: banks transform short-term deposits into long-term loans (maturity transformation), pool risk, reduce information asymmetry and provide payment services.

Interest rate risk: a borrower fearing rising rates can fix via an interest rate swap or forward rate agreement; a lender fearing falling rates can do the same in reverse.

Efficient market hypothesis: weak form (prices reflect past prices), semi-strong (all public information), strong (all information including private). Most evidence supports semi-strong efficiency.

Exchange rate quotation: direct quote gives domestic currency per unit of foreign currency; indirect quote gives foreign currency per unit of domestic. Forward rate = spot × (1 + interest rate of quote currency) ÷ (1 + interest rate of base currency).

Venture capital funds high-risk start-ups for equity; a business angel is a wealthy individual investor. Leasing finances use of an asset without ownership; a finance lease transfers substantially all risks and rewards.

Capital structure: Modigliani–Miller without tax says firm value is independent of gearing; with tax, the tax shield on debt raises value, offset by financial distress costs.

Ratios for lenders: interest cover = operating profit ÷ interest; gearing and cash flow cover indicate ability to service and repay debt.

Strategic planning levels: corporate (what businesses to be in), business (how to compete), functional (marketing, operations, finance) and operational (day-to-day) planning.

SWOT analyses internal strengths and weaknesses against external opportunities and threats; PESTLE analyses political, economic, social, technological, legal and environmental factors.

Porter's five forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers and bargaining power of suppliers.

Ansoff matrix: market penetration (existing product/market), market development, product development and diversification (highest risk).

Decision rules: maximax chooses the best of the best outcomes (risk-seeking); maximin chooses the best of the worst (risk-averse); minimax regret minimises the maximum opportunity loss.

Organisational culture types (Handy): power, role, task and person cultures. A role culture relies on rules and procedures and suits stable environments.

Corporate social responsibility reporting covers environmental impact, employee welfare, community engagement and ethical supply chains, and is disclosed in the annual report or a sustainability report.

Risk management process: identify risks, assess likelihood and impact, evaluate against risk appetite, treat, then monitor and review.