Porter's Five Forces
A framework for analyzing industry competitiveness: threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers, and rivalry among existing competitors.
Full BT breakdown →GDPR
The General Data Protection Regulation — an EU framework for data privacy and protection, covering how organisations collect, store, and process personal data.
Full BT breakdown →Contribution Margin
Sales price minus variable cost per unit — the amount each unit sold contributes toward covering fixed costs and, beyond that, profit.
Full MA breakdown →Standard Costing & Variance
A standard cost is the planned cost per unit. A variance is the difference between standard and actual cost — split into price/rate variances (cost per unit of input) and usage/efficiency variances (quantity of input used).
Full MA breakdown →Trial Balance
A listing of all ledger account balances, used to check that total debits equal total credits before preparing financial statements — it can still balance even with certain types of errors present.
Full FA breakdown →Net Realisable Value (NRV)
Under IAS 2, inventory is valued at the lower of cost and NRV — the estimated selling price less costs to complete and sell. This prevents inventory from being carried on the books above what it can realistically be sold for.
Full FA breakdown →Consideration
Something of value exchanged between parties to a contract — one of the essential elements of a valid contract under English law, alongside offer and acceptance and intention to create legal relations.
Full LW breakdown →Fixed / Floating Charge
Security a lender takes over a company's assets. A fixed charge attaches to a specific, identified asset (e.g., a building). A floating charge hovers over a class of changing assets (e.g., inventory) until it "crystallises" on a triggering event like insolvency.
Full LW breakdown →Throughput Accounting
A costing approach that maximizes throughput (sales revenue minus material cost) per unit of a bottleneck resource — treats direct labour and overheads as largely fixed in the short run, unlike traditional absorption costing.
Full PM breakdown →Transfer Pricing
The price charged for goods or services transferred between divisions of the same company — set too high or too low, it can distort divisional performance measures like ROI even when the group as a whole is unaffected.
Full PM breakdown →Personal Allowance
The amount of income a UK individual can earn tax-free each year before income tax applies — subtracted from total income to arrive at taxable income.
Full TX breakdown →Capital Allowances
The UK tax system's substitute for accounting depreciation — a statutory deduction (e.g., the Annual Investment Allowance, writing-down allowances) against taxable profits for capital expenditure on qualifying assets.
Full TX breakdown →Goodwill
The excess of consideration paid for a business over the fair value of its identifiable net assets acquired — representing value from factors like brand, workforce, or synergies that can't be separately recognized.
Full FR breakdown →IFRS 16 (Leases)
The lease accounting standard requiring lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a corresponding lease liability, eliminating the old operating/finance lease distinction for lessees.
Full FR breakdown →Materiality
The threshold at which a misstatement in financial statements could reasonably influence a user's decisions — used by auditors to set the scope and depth of testing during an audit.
Full AA breakdown →Going Concern
The assumption that an entity will continue operating for the foreseeable future. If this assumption is in doubt (ISA 570), the auditor must assess management's plans and consider additional disclosure or a modified opinion.
Full AA breakdown →WACC
Weighted Average Cost of Capital — a company's blended cost of debt and equity financing, weighted by their share of the capital structure, used as the discount rate in investment appraisal.
Full FM breakdown →NPV
Net Present Value — the sum of a project's discounted future cash flows minus the initial investment. A positive NPV indicates the project is expected to create value above its cost of capital.
Full FM breakdown →Modigliani-Miller (M&M)
A set of propositions about capital structure — in a perfect market with no taxes, a firm's value is unaffected by how it's financed (debt vs. equity). With taxes added, debt's tax shield makes higher leverage value-increasing, up to a point.
Full FM breakdown →Economic Order Quantity (EOQ)
The order quantity that minimizes the total cost of holding and ordering inventory — balancing the trade-off between ordering more often (higher ordering costs) and holding more stock (higher holding costs).
Full MA breakdown →