0.1 Master Jargon Decoder & Quantitative Formulas
Examiner Grounding: This reference contains the complete vocabulary bridge and mathematical formula bank required for the SEAB 9587 examination. Note the explicit syllabus distinction: quantitative calculations are tested in Break-even, Investment Appraisal, Variance Analysis, and Capacity Utilisation; financial ratios are interpretation only.
1. Core Jargon Decoder
| Term | Plain English Meaning | Examiner Trap / Distinguishing Feature |
|---|---|---|
| Value Creation | Generating tangible (financial) or intangible (non-financial) benefits for stakeholders. | Primary purpose of all business; not just maximizing shareholder profit. |
| Profit Satisficing | Earning sufficient profit to satisfy owners while pursuing other goals (e.g. ethical sourcing, work-life balance). | Contrast with Profit Maximisation (squeezing maximum dollar returns). |
| Stakeholder | Any group that has an interest in or is affected by business activities. | Competitors are NOT stakeholders (SEAB syllabus rule). Internal/external split not required. |
| Limited Liability | Shareholders only lose the capital they invested; personal assets cannot be seized for business debts. | Only applies to incorporated entities (Pte Ltd, Public Ltd), not sole proprietorships/partnerships. |
| Mechanistic Structure | Rigid, bureaucratic, centralized hierarchy with narrow spans of control. | Best in stable, predictable environments; contrast with Organic Structure (flexible, decentralized). |
| Tripartite Relationship | The 3-way partnership between Government (MOM), Employers (SNEF), and Unions (NTUC) in Singapore. | Singapore-specific framework that ensures industrial peace and consensus wage policies (NWC). |
| PDCA Cycle | Plan \rightarrow Do \rightarrow Check \rightarrow Act continuous quality improvement loop. | Proactive quality philosophy; contrast with reactive Quality Control (QC) inspection. |
| Working Capital Cycle | The time lag between paying cash for raw materials and receiving cash from customer sales. | Shorter cycle = stronger liquidity; profit does not equal cash! |
| Core Competency | A unique, embedded capability that competitors cannot easily replicate. | Originates from combined internal resources and capabilities (e.g. SIA’s service culture). |
| Differentiation | Competing by offering superior perceived value driven by quality, branding, or service. | Driven by Value Drivers; contrast with Cost Leadership (driven by Cost Drivers). |
2. Master Quantitative Formula Bank
A. Operations & Marketing Formulas (Must Calculate)
\text{Market Share (\%)} = \frac{\text{Firm's Sales Revenue}}{\text{Total Market Sales Revenue}} \times 100
\text{Market Growth (\%)} = \frac{\text{Change in Market Size}}{\text{Original Market Size}} \times 100
\text{Capacity Utilisation (\%)} = \frac{\text{Actual Output}}{\text{Maximum Potential Capacity}} \times 100
B. Costing & Break-Even Formulas (Must Calculate)
\text{Contribution Per Unit} = \text{Selling Price (P)} - \text{Variable Cost Per Unit (VC)}
\text{Total Contribution} = \text{Output Sold (Q)} \times \text{Contribution Per Unit}
\text{Break-Even Quantity } (Q_{BE}) = \frac{\text{Total Fixed Costs (FC)}}{\text{Contribution Per Unit (P - VC)}}
\text{Break-Even Revenue (S\$)} = Q_{BE} \times \text{Selling Price (P)}
\text{Margin of Safety (Units)} = \text{Actual / Planned Output} - Q_{BE}
\text{Margin of Safety (\%)} = \frac{\text{Actual Output} - Q_{BE}}{\text{Actual Output}} \times 100
\text{Operating Profit (S\$)} = [Q \times (P - VC)] - FC
\text{Target Output for Desired Profit} = \frac{FC + \text{Target Profit}}{\text{Contribution Per Unit}}
C. Budgetary Variance & Investment Appraisal Formulas (Must Calculate)
\text{Variance (S\$)} = \text{Actual Financial Result} - \text{Budgeted Financial Figure}
(Favourable [F] if Revenue > Budget or Cost < Budget; Adverse [A] if Cost > Budget or Revenue < Budget)
\text{Payback Period (Constant Inflows)} = \frac{\text{Initial Capital Outlay}}{\text{Annual Net Cash Inflow}}
\begin{gathered} \text{Payback (Uneven Inflows)} = \text{Years Before Full Recovery} \\ + \left( \frac{\text{Unrecovered Outlay at Start of Year}}{\text{Net Inflow in Next Year}} \times 12\text{ months} \right) \end{gathered}
\text{Average Annual Profit} = \frac{\text{Total Cumulative Net Cash Inflows} - \text{Initial Capital Outlay}}{\text{Project Lifespan in Years}}
\text{Accounting Rate of Return (ARR \%)} = \frac{\text{Average Annual Net Profit}}{\text{Initial Capital Outlay}} \times 100
\text{Net Present Value (NPV)} = \sum \text{Present Values of Future Net Cash Inflows} - \text{Initial Capital Outlay}
(Decision Rule: Accept project if \text{NPV} > 0)
D. Financial Ratio Bank (Interpretation Only — SEAB Syllabus Rule)
| Ratio Category | Ratio Name | Formula (For Interpretation Reference) | Benchmark / Healthy Norm |
|---|---|---|---|
| Liquidity | Current Ratio | \frac{\text{Current Assets}}{\text{Current Liabilities}} | $1.5 : 1 2.0 : 1$ |
| Acid-Test (Quick) Ratio | \frac{\text{Current Assets} - \text{Inventory}}{\text{Current Liabilities}} | $1.0 : 1$ (immediate liquidity) | |
| Profitability | Gross Profit Margin (GPM) | $ $ | Higher = better pricing power |
| Net Profit Margin (NPM) | $ $ | Higher = efficient overhead control | |
| Return on Equity (ROE) | $ $ | Compare against cost of equity / hurdle rate | |
| Gearing | Debt-to-Equity Ratio | \frac{\text{Non-Current Liabilities (Debt)}}{\text{Shareholders' Equity}} | > 1.0 = Highly geared / high insolvency risk |
| Investment | Dividend Yield | $ $ | Cash return to shareholders |
| Earnings Per Share (EPS) | \frac{\text{Net Profit After Tax}}{\text{Total Issued Ordinary Shares}} | Core metric of equity shareholder value |