Germany Jahrgangsstufe 12 Economics and Law
Chapters: 3
1. Business administration
Company structure and goals · Procurement, production and break-even · Annual accounts and balance sheet analysis · Investment appraisal and financing · Strategic management
- Sole Proprietorship, Partnership and Hindu Undivided Family Business – A sole proprietorship is owned and run by one person who takes all profit and bears unlimited liability. A partnership is run by two or more people who share profit under an agreement; its partners are of many kinds and a written deed and registration protect them. A Hindu Undivided Family business is run by the eldest member, the karta, for all family members, who become members by birth.
- Break-Even Analysis – A business breaks even when total revenue equals total cost, so profit is zero. Each unit sold brings a contribution = price − variable cost per unit, which first pays off the fixed costs. Break-even output = fixed costs ÷ contribution per unit. Sales above this make a profit; below it make a loss. Margin of safety = actual sales − break-even sales. To earn a target profit, sell (fixed costs + target profit) ÷ contribution per unit.
- Tools of Financial Statement Analysis – Analysis means studying financial statements to judge a company's profit, safety and growth. Its main tools are comparative statements (compare two years side by side: change in rupees and %) and common-size statements (show every item as a % of a common base: revenue or total). Analysis has limits: it uses past data, ignores non-money facts and depends on accounting choices.
- Financial Management: Raising and Using Money Wisely – Financial management is about getting money at the lowest cost and using it in the best way. Its main objective is to maximise shareholders' wealth, seen in a rising share price. It makes three decisions: investment (where to use money), financing (from where to raise it) and dividend (how much profit to share). Financial planning prepares a money budget in advance. Capital structure is the mix of debt and equity; trading on equity uses cheap debt to raise EPS. Fixed capital buys long-life assets; working capital runs daily work.
- Planning: Meaning, Process and Types of Plans – Planning means deciding in advance what to do, how, when and by whom. It is the first function of management. It gives direction and reduces risk, but it can be rigid and costly. It follows 7 steps, from setting objectives to follow-up. Plans are single-use (for one event) or standing (for repeated work), and come in 8 types: objectives, strategy, policy, procedure, method, rule, budget and programme.
2. Economics
Macroeconomic goals and business cycle · Economic growth and employment policy · Wages and the social security system
- Basic Macroeconomic Concepts: Goods, Stocks, Flows and Investment – Macroeconomics looks at the whole economy. Before we measure national income we need a few words. Final goods are bought for final use; intermediate goods are used up by firms in making other goods in the same year. Final goods are consumption goods (used up by families) or capital goods (used again and again to produce). A stock is measured at a point of time; a flow over a period. Gross investment is all new capital; depreciation is normal wear and tear; net investment = gross investment − depreciation.
- Government Budget and the Economy – A government budget is a yearly plan of expected receipts and planned expenditure. Receipts are revenue (taxes, non-tax income) or capital (borrowing, loan recovery, disinvestment). Spending is revenue (builds no asset) or capital (builds an asset or cuts debt). A budget can be balanced, surplus or deficit, and the deficit is measured as revenue, fiscal and primary deficit.
- Income Distribution and Social Security – Income distribution is how the money earned by a country is shared among its people. First the market pays wages, rent, interest and profit (primary distribution). Then the government changes the shares with taxes and benefits (redistribution). Social security is the safety net, such as pensions, health cover and unemployment support, that protects people when they cannot earn.
3. Law
Legal method basics in civil law · Civil law: property claims and tort liability
- Civil Law: Rights and Duties Between People – Civil law (private law) is the part of law that governs relations between ordinary persons: people, companies and sometimes the state when it acts like a private party. It covers who can have rights (legal persons and their capacity), things and property, obligations (duties that come from contracts or from causing harm), family and inheritance. When someone breaks a civil duty, the aim is not punishment but repair: the wronged person can ask a court for compensation (damages for real loss and lost profit), for the thing back, or for the wrong to stop. A tort is a civil wrong outside a contract, such as negligence that injures someone or damages their property. Usually the person at fault pays; children may be only partly liable, and parents or guardians may answer for them. Claims must be brought within a limit of time (the limitation period). Many countries collect these rules in a civil code; others build them mostly from court decisions; both protect the same basic ideas.