Analysing the Size of the Business Flashcards

This set of vocabulary flashcards covers concepts related to business size analysis, distinguishing between plants, firms, and industries, and defining various input/output measures and Maldivian SME classification standards.

Plant

A single physical unit of production, such as one factory, one farm, one resort island, or one fish processing facility.

Firm

The legal and organisational unit that owns and controls one or more plants, responsible for decision-making and signing contracts.

Industry

A group of firms producing the same or closely related products or services, often classified by standard codes like ISIC.

Minimum Efficient Scale (MES)

The output level at which long-run average costs are minimised for a plant; for example, a fish canning plant needing to process at least $50$ tonnes/day.

ISIC (International Standard Industrial Classification)

Standard codes used to classify industries for national accounts and economic surveys, with Maldives currently using ISIC Rev 4.

Turnover / Revenue

The total sales value of a business, reflecting market scale but not necessarily profitability or true economic contribution.

Capital Employed

The total long-term capital financing the business, calculated as $Equity + Long\text{-}term\text{ debt}$, used to determine the Return on Capital Employed (ROCE).

Market Share

The percentage of total industry output or sales held by a single firm, calculated as $(\text{Firm revenue} / \text{Industry revenue}) \times 100$.

Value Added

The most accurate measure of economic contribution, calculated as $Revenue - \text{Cost of bought-in goods and services}$.

Micro Enterprise (Maldives Standard)

A business with $\text{employees} \times \text{annual revenue} \times \text{MVR } 1.5\text{ million}$.

Small Enterprise (Maldives Standard)

A business with $6-30$ employees and annual revenue between $MVR\text{ }1.5\text{ million}$ and $MVR\text{ }20\text{ million}$.

Medium Enterprise (Maldives Standard)

A business with $31-100$ employees and annual revenue between $MVR\text{ }20\text{ million}$ and $MVR\text{ }100\text{ million}$.

Large Enterprise (Maldives Standard)

A business with $> 100$ employees or annual revenue $> MVR\text{ }100\text{ million}$.

Input Measures

Supply-side assessments that quantify resources used in production, primarily involving labour (employment) and capital (assets).

Output Measures

Demand-side assessments that quantify what a firm produces or sells, such as revenue, profit, value added, or physical volume.

Full-Time Equivalent (FTE)

A standardised measure used to account for part-time and seasonal workers, where $2$ half-time workers equal $1$ FTE.

Fixed Capital

Long-lived assets such as buildings, machinery, resort infrastructure, boats, and vehicles measured by net book value or replacement cost.

Working Capital

Short-term assets used in daily operations, including inventory and receivables, particularly relevant for importers and wholesalers.

Capital Intensity

The amount of capital per worker, typically high in resorts due to infrastructure and low in artisanal fishing.

Physical Output Volume

A measure of actual quantity produced (e.g., tonnes of tuna, tourist nights, or litres of water) that avoids price distortion from inflation.