Business Management SL

6

Chapters

175

Notes

Unit 1 - Introduction To Business Management

Unit 2 - Human Resource Management

Unit 3 - Finance & accounts

Unit 4 - Marketing

Unit 5 - Operations management

Unit 6 - Assessment

Business Management SL

615 words

4 mins read

Last edited onย 14th Jun 2024

**Investment Appraisal:** Evaluates if an investment proposal is worth the cash.

- ๐ฏ
**Goal:**Determine if a business venture is worth pursuing and will make money. - ๐ Helps businesses compare different investment opportunities.

- โฒ๏ธ Tells how long it takes for an investment to
*pay back*its starting cost. **Formula**

Payback Period =**\(\frac{ Initial\, Investment \,Cost}{Annual \,Cash \,Flow \,from \,Investment}\)**

**๐ Real-World Example: ๐**

**Construction Engineer & Cement Mixer**- Investment = $200,000
- Annual Cash Flow = $50,000
- Payback Period = 4 years
- This means the engineer gets back the money spent on the mixer in 4 years.

**Timber-Cutting Machine**- Takes 3 years and 6 months to repay a $300,000 investment.
- More complex due to varying cash flows each year.

- ๐ฅ
**Rule of Thumb**Shorter payback periods are generally better.**:**

- ๐ Quick & easy calculation.
- ๐ฅ๏ธ Useful for fast-changing sectors like tech.
- ๐ฐ Helps businesses with cash flow issues.
- ๐ Good for short-term projections.
- ๐ฉ๐ผ Managers love it because it's simple!

- ๐ Ignores cash earned after the payback period.
- ๐ต Focuses only on quick returns, not overall profitability.
- ๐ช๏ธ External factors can mess up the numbers.

Dive deeper and gain exclusive access to premium files of Business Management SL. Subscribe now and get closer to that 45 ๐

Business Management SL

615 words

4 mins read

Last edited onย 14th Jun 2024

**Investment Appraisal:** Evaluates if an investment proposal is worth the cash.

- ๐ฏ
**Goal:**Determine if a business venture is worth pursuing and will make money. - ๐ Helps businesses compare different investment opportunities.

- โฒ๏ธ Tells how long it takes for an investment to
*pay back*its starting cost. **Formula**

Payback Period =**\(\frac{ Initial\, Investment \,Cost}{Annual \,Cash \,Flow \,from \,Investment}\)**

**๐ Real-World Example: ๐**

**Construction Engineer & Cement Mixer**- Investment = $200,000
- Annual Cash Flow = $50,000
- Payback Period = 4 years
- This means the engineer gets back the money spent on the mixer in 4 years.

**Timber-Cutting Machine**- Takes 3 years and 6 months to repay a $300,000 investment.
- More complex due to varying cash flows each year.

- ๐ฅ
**Rule of Thumb**Shorter payback periods are generally better.**:**

- ๐ Quick & easy calculation.
- ๐ฅ๏ธ Useful for fast-changing sectors like tech.
- ๐ฐ Helps businesses with cash flow issues.
- ๐ Good for short-term projections.
- ๐ฉ๐ผ Managers love it because it's simple!

- ๐ Ignores cash earned after the payback period.
- ๐ต Focuses only on quick returns, not overall profitability.
- ๐ช๏ธ External factors can mess up the numbers.

Dive deeper and gain exclusive access to premium files of Business Management SL. Subscribe now and get closer to that 45 ๐