3.4.3

Understanding Business Performance

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Financial Data

Financial data is quantitative data that contains information about the financial performance and financial position of a firm. The financial statements published by firms and internal data about sales and profits are examples of financial data. The uses of financial data include:

Internal performance assessment

Internal performance assessment

  • Financial data can be used by internal management to assess the financial performance of a firm.
  • Financial data is useful in spotting when the firm is not doing well and getting to the bottom of why it is not doing well.
  • Business managers can use the financial data to spot trends and see if the firm is growing and becoming more or less profitable.
Investor assessment

Investor assessment

  • Financial data can be used by potential investors to see if it is worth investing in the business.
Competitor assessment

Competitor assessment

  • Financial data can be used to compare a firm’s performance to the performance of their competitors.
  • This gives a benchmark of how the firm should be performing compared to how they are actually performing.
Limitations of financial data

Limitations of financial data

  • Financial data is not as factual as it might seem. Sometimes it is based on people’s judgment or computer modelling.
  • Financial data may only give a snapshot of financial performance at one point in time. This can be misleading as it may not take into account external factors or competitors’ behaviour.
  • Looking only at one firm’s financial data does not always give a good idea of that firm’s performance.

Information from Graphs and Charts

Businesses often use information from graphs and charts. They make it easy for people to interpret the information quickly and help businesses to spot trends in the data that they may not otherwise have spotted from simply looking at numbers on a page.

Information from graphs and charts

Information from graphs and charts

  • The UK Government’s National Income Accounts, and Family Expenditure Surveys are prepared through the National Statistics Office and are a good source of this kind of data.
  • Data from specific industries such as that produced by the The Society of Motor Manufacturers and Traders (SMMT) can be useful for these kinds of information and graphics.
Jump to other topics
1

Business Activity & Influences on Business

1.1

Business Objectives

1.1.1Business Aims1.1.2Business Objectives1.1.3Business Objectives Change Over Time1.1.4End of Topic Test - Business Aims1.1.5Diagnostic Misconceptions - Profit
1.2

Types of Organisations

1.2.1Sole Traders & Partnerships1.2.2Limited Companies1.2.3Limited Liability1.2.4Unlimited vs Limited Liability1.2.5Not For Profit & Franchises1.2.6Multinational Companies1.2.7End of Topic Test - Business Ownership1.2.8Application Questions - Business Ownership1.2.9Diagnostic Misconceptions - Company vs Business1.2.10Diagnostic Misconceptions - Owners vs Shareholders
1.3

Classification of Businesses

1.3.1Sectors
1.4

Decisions on Location

1.4.1Location
1.5

Business & the International Economy

1.5.1Globalisation1.5.2Exchange Rates
1.6

Government Objectives & Policy

1.6.1Government Objectives1.6.2The Government & Business Activity1.6.3Interest Rates1.6.4Interest Rates - Calculations1.6.5Diagnostic Misconceptions - Recessions
1.7

External Factors

1.7.1External Factors
1.8

What Makes a Business Successful?

1.8.1Measuring Success1.8.2Reasons for Failure
2

People in Business

2.1

Internal & External Communication

2.1.1Communication
2.2

Recruitment & Selection Process

2.2.1Types of Employment2.2.2Recruitment Stages2.2.3Effective Recruitment2.2.4Legal Controls Over Employment2.2.5Diagnostic Misconceptions - Internal Recruitment
2.3

Training

2.3.1Training
2.4

Motivation & Rewards

2.4.1Motivation in the Workplace2.4.2Financial & Non-Financial Methods2.4.3End of Topic Test - The Workforce2.4.4Application Questions - The Workforce2.4.5Diagnostic Misconceptions - Money
2.5

Organisation Structures

2.5.1Organisational Structures2.5.2Centralised vs. Decentralised Structures2.5.3Tall & Flat Organisations2.5.4Functional Areas Within a Business2.5.5End of Topic Test - Org Structure
3

Business Finance

3.1

Sources of Finance

3.1.1Internal & External Sources of Finance3.1.2Factors Affecting Sources of Finance
3.2

Cash Flow Forecasting

3.2.1Cash Flow3.2.2Consequences of Cash Flow Problems3.2.3Cash Flow - Calculations3.2.4Solutions to Cash Flow Problems3.2.5Diagnostic Misconceptions - Cash Flow
3.3

Cost & Break-Even Analysis

3.3.1Costs, Revenue & Profit3.3.2Profit, Average Unit Cost & Interest3.3.3Costs - Calculations3.3.4Revenue - Calculations3.3.5Break-Even Analysis3.3.6Profit & Losses - Calculations3.3.7End of Topic Test - Finance3.3.8Grade 9 - Finance3.3.9Diagnostic Misconceptions - Fixed Costs3.3.10Diagnostic Misconceptions - Break-even
3.4

Financial Documents

3.4.1Financial Statements3.4.2Income Statement3.4.3Understanding Business Performance
3.5

Account Analysis

3.5.1Business Calculations3.5.2Gross Profit - Calculations3.5.3Net Profit - Calculations3.5.4Business Calculations 23.5.5Business Calculations 33.5.6Liquidity
4

Marketing

4.1

Market Research

4.1.1Market Research4.1.2Forms of Market Research
4.2

The Market

4.2.1Customer Needs4.2.2Satisfying Customer Needs4.2.3Market4.2.4The Competitive Environment4.2.5Market Segmentation4.2.6Market Mapping - Price vs Quality4.2.7End of Topic Test - Marketing4.2.8Application Questions - Marketing4.2.9Diagnostic Misconceptions - Competition
4.3

The Marketing Mix

4.3.1Price4.3.2Price Penetration4.3.3Other Forms of Pricing4.3.4Product Design4.3.5The Product Life Cycle4.3.6Extending Existing Products4.3.7New Products4.3.8Benefits and Risks of New Products4.3.9Promotion4.3.10Public Relations and Sales Promotion4.3.11Sponsorship & Social Media4.3.12Product Placements4.3.13Promotional Mix4.3.14Place4.3.15Place 24.3.16Place 34.3.17M-Commerce4.3.18Benefits & Drawbacks of M-Commerce4.3.19End of Topic Test - Marketing Mix4.3.20Grade 9 - Marketing Mix4.3.21Diagnostic Misconceptions - Decreasing Price4.3.22Diagnostic Misconceptions - Advertise vs Promote4.3.23Diagnostic Misconceptions - Social Media
5

Business Operations

5.1

Economies & Diseconomies of Scale

5.1.1Economies of Scale5.1.2Diagnostic Misconceptions - Economies of Scale
5.2

Production

5.2.1Production Processes5.2.2Flow and Batch Production5.2.3Production Efficiency5.2.4Technology & Production5.2.5Diagnostic Misconceptions - JIT vs JIC
5.3

Factors of Production

5.3.1Factors of Production
5.4

Quality

5.4.1Importance of Quality5.4.2Identifying Quality5.4.3Total Quality Management5.4.4End of Topic Test - Operational Decisions

Practice questions on Understanding Business Performance

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Examples of financial data:Fill in the list
  2. 2
    Usually, what type of data is financial data?Multiple choice
  3. 3
    Benefits and drawbacks of internal performance assessments:True / false
  4. 4
    Benefits of using graphs and charts:True / false
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Income Statement

Business Calculations