JCE Business Studies cheat sheet

A budget balances income against fixed costs (rent, insurance), variable costs (food, utilities) and discretionary spending; surplus income = total income − total expenditure.

Simple interest: I = P × r × t. Compound interest: A = P(1 + r/n)^(nt), where n is compounding periods per year; compounding frequency raises effective yield.

Annual Percentage Rate (APR) expresses the true yearly cost of borrowing including fees; compare loans by APR, not by headline rate alone.

Emergency fund rule of thumb: hold three to six months of essential living expenses in liquid, low-risk savings.

Pay-yourself-first saving means transferring a fixed percentage of income to savings before discretionary spending begins.

Gross pay minus statutory deductions (income tax, social security/NIS, pension) equals net (take-home) pay.

Inflation erodes purchasing power: real interest rate ≈ nominal interest rate − inflation rate; savings earning below inflation lose real value.

Risk–return relationship: higher expected return requires accepting higher risk; diversification reduces unsystematic risk but not market risk.

Core consumer rights commonly protected by law: right to safety, right to be informed, right to choose, right to be heard, right to redress, and right to consumer education.

A contract of sale requires offer, acceptance, consideration and intention to create legal relations; a misleading description can make the contract voidable.

Goods must be of merchantable quality, fit for the purpose made known to the seller, and match their description; breach entitles the buyer to repair, replacement, refund or damages.

Cooling-off periods allow cancellation of certain distance or door-to-door contracts within a set number of days, subject to statutory conditions.

Consumer responsibilities include reading labels and contracts, keeping receipts as proof of purchase, using products as directed, and complaining promptly.

Redress channels in order: seller, manufacturer or importer, then consumer-protection/standards agency or small-claims court, then formal litigation.

Bait advertising, false weight claims, pyramid schemes and unsolicited credit-card issuance are typical unfair trade practices prohibited by consumer-protection statutes.

Warranties are express promises by the seller or manufacturer; guarantees under consumer law exist independently and cannot be excluded by contract terms.

Sole trader: one owner, unlimited liability, no separate legal personality, taxed on personal income, simplest and cheapest to form.

Partnership: two or more owners sharing profits per the partnership agreement; general partners have unlimited liability, limited partners only up to capital contributed.

Private limited company (Ltd): separate legal personality, limited liability, shares not offered to the public; public limited company (PLC) may list shares on a stock exchange.

Cooperative: owned and democratically controlled by members on a one-member-one-vote basis; profits distributed as patronage dividends.

Public corporation (state-owned enterprise): owned by government, established by statute, accountable to the state, often for public services or natural monopolies.

Franchise: franchisor licenses brand, systems and support to franchisee for fees and royalties; franchisee bears capital risk but gains a proven model.

Organisational structures: functional (grouped by department), divisional (by product or region), matrix (dual reporting) and flat/holacratic (few management layers, wide span of control).

Span of control, chain of command, delegation and centralisation versus decentralisation determine how decision-making authority is distributed.

Accounting equation: Assets = Liabilities + Owner's Equity; every transaction preserves this balance (double-entry).

Balance sheet (statement of financial position) reports assets, liabilities and equity at a point in time; income statement reports revenues and expenses over a period.

Gross profit = Revenue − Cost of Goods Sold; net profit = Gross profit − Operating expenses (plus other income, less interest and tax).

Gross profit margin = Gross profit ÷ Revenue × 100%; net profit margin = Net profit ÷ Revenue × 100%; mark-up = Gross profit ÷ Cost of Goods Sold × 100%.

Working capital = Current assets − Current liabilities; current ratio = Current assets ÷ Current liabilities (≈2:1 often cited); quick ratio excludes inventory.

Break-even output = Fixed costs ÷ (Selling price − Variable cost per unit); margin of safety = Actual sales − Break-even sales.

Cash flow forecast records expected inflows and outflows by period; profit is not cash - timing differences, credit sales and loan repayments cause divergence.

Sources of finance: internal (retained earnings, sale of assets) versus external (bank loans, overdrafts, shares, debentures, leasing, trade credit); short-term versus long-term matching to need.

Marketing mix (4Ps): Product, Price, Place, Promotion; for services add People, Process and Physical evidence (7Ps).

Market segmentation divides a market by demographic, geographic, psychographic or behavioural criteria; targeting selects segments; positioning defines perceived value versus competitors.

Product life cycle stages: development, introduction, growth, maturity, decline; strategy shifts from penetration pricing to extension, relaunch or divestment.

Pricing methods: cost-plus, penetration (low initial price to build share), skimming (high initial price), competitive, psychological and loss-leader pricing.

Promotion mix: advertising, sales promotion, personal selling, public relations and direct/digital marketing; choice depends on budget, target audience and product type.

Distribution channels: direct (producer to consumer) versus indirect (producer to wholesaler to retailer to consumer); each intermediary adds cost and reach.

Market research: primary (surveys, interviews, observation, test marketing) versus secondary (published reports, government statistics); sampling must be representative to be valid.

Sales performance measures: sales volume, sales value, market share = Firm's sales ÷ Total market sales × 100%, and customer retention rate.

HRM cycle: workforce planning, recruitment, selection, induction, training and development, appraisal, reward, and separation.

Recruitment sources: internal (promotion, transfer - cheaper, motivating) versus external (advertising, agencies, job centres - brings new skills and ideas).

Selection tools: application forms, CVs, interviews, aptitude and psychometric tests, assessment centres, references; reliability and validity determine usefulness.

Employment contract terms: job title, pay, hours, holiday, notice period, and statutory rights such as minimum wage, health and safety, and protection from unfair dismissal.

Training types: induction (orientation), on-the-job (coaching, job rotation) and off-the-job (courses, simulation); appraisal methods include rating scales, critical-incident and 360-degree feedback.

Motivation theories: Maslow's hierarchy of needs, Herzberg's motivators versus hygiene factors, and financial versus non-financial rewards.

Labour turnover = (Number of leavers ÷ Average number of employees) × 100%; absenteeism and turnover signal poor morale or poor selection.

Dismissal must be fair and follow procedure (warning, hearing, right of appeal); redundancy arises when a role disappears, not when a person is replaced.

Methods of production: job (one-off, customised), batch (groups of identical units), mass/flow (continuous, high volume, low unit cost) and just-in-time (inputs arrive as needed, minimal stock).

Productivity = Output ÷ Input (e.g., units per worker-hour); raising productivity lowers unit cost if quality is maintained.

Economies of scale: purchasing, technical, financial, managerial and marketing; diseconomies arise from coordination, motivation and control problems as firms grow.

Capacity utilisation = Actual output ÷ Maximum possible output × 100%; low utilisation raises unit fixed cost.

Stock control: maximum, minimum and reorder levels; lead time; buffer stock; JIT reduces holding costs but raises risk of supply disruption.

Quality management: quality control (inspection after production) versus quality assurance (process design) versus total quality management (continuous improvement, zero defects, employee involvement).

Lean production eliminates waste (muda) through kaizen, kanban, cell production and standardisation; critical path analysis sequences dependent tasks to find the minimum project duration.

Location decisions weigh proximity to market, raw materials, labour supply and cost, infrastructure, government incentives and competitors' presence.

An entrepreneur identifies an opportunity, assembles resources, bears risk and innovates; key traits cited include initiative, resilience, self-confidence and opportunity awareness.

Business plan components: executive summary, business description, market analysis, marketing plan, operations plan, management team, financial forecasts and risk assessment.

Feasibility analysis tests market demand, technical capability and financial viability before committing resources.

Start-up finance sources: personal savings, family and friends, bank loans, government grants, angel investors, venture capital and crowdfunding.

SMART objectives are Specific, Measurable, Achievable, Relevant and Time-bound; they translate mission and vision into targets.

SWOT (Strengths, Weaknesses, Opportunities, Threats) and PESTLE (Political, Economic, Social, Technological, Legal, Environmental) frame internal and external analysis.

Risk management: identify, assess likelihood and impact, then avoid, reduce, transfer (insurance) or accept the risk.

Exit strategies for owners: trade sale, management buy-out, initial public offering, family succession or liquidation.