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Business Studies IGCSEPDF 26
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Measures ability to pay short-term debts without selling inventory.
Formula:
Acid test ratio = (current assets-inventory) / Current liabilities
● External influences:
Factors outside a business’s control that affect its operations, decisions, and
performance.
● Economic activity:
The production, distribution, and consumption of goods and services in an
economy.
● Business cycle:
The periodic fluctuations in economic activity — including growth, recession, and
recovery.
● Gross Domestic Product (GDP):
The total value of goods and services produced in a country over a period.
● Recession:
A period of economic decline where GDP falls and demand for goods and
services decreases.
● Economic growth:
An increase in a country’s output of goods and services over time.
● Inflation:
A general rise in the prices of goods and services over time.
● Deflation:
A general fall in prices across the economy.
● Exchange rate:
The value of one currency compared with another.
● Interest rate:
The cost of borrowing money or the reward for saving.
● Unemployment:
The proportion of people in the labour force who are willing and able to work but
cannot find jobs.
Acid test ratio (quick ratio):
➢ Unit 6: External Influences on Business Activity