1.3 Flashcards
What are financial object for a business?
- Survival
- Profits
- Sales
- Market Share
- Financial security
What are non-financial object for a business?
- Social Objectives
- Personal Satisfaction
- Challenge
- Independence
- Control
Why do business objectives differ between business?
Size
Define Private Sector-
Controlled by groups or individuals. e.g New Look
Define Public Sector-
Controlles, managed and operated by the government e.g NHS
Revenue=
Quality of units sold X selling price
Cost-
Business have to pay to produce their good
Price -
How much something is sold at
Fixed cost-
Cost that don’t change depending on the output
What are examples of fixed costs?
- Rent
- Computer
- Insurance
- delivery costs
- Salary
Variable Costs-
Costs that do change with the amount of output
What are examples of variable costs?
- Packaging
- Raw materials
Define salary-
Calculated over a year (annually) perod and usually divided by 12 monthly periods
Define wages-
Paid by the hours of work completed or contracted. Working hours set can change
Define total costs-
The sum of all costs in the business, they are fixed and variable costs added together
Equation for total costs=
Fixed costs + Variable costs
Profit=
Total revenue - total costs
What does it mean if a number is in brackets?
It’s negative
Equation for % change?
new-old/old X 100
Define break even?
When the business isn’t making a profit or a loss
What is the equation for break even?
fixed costs/selling price- variable costs
Equation for margin of safety=
Actual sales- break even point
Define margin of safety
The amount of sales the business can loose before they make a financial loss
Define supplier
A business that sells materials to another business
Define invency
Don’t have enough money to pay costs
Deine cash
Money available
Define cash flow
The relationship between the money flowing into a business and the money flowing out
Define cash flow forecast
a prediction of how much cash is coming in and going out of a business over a period of time
Define cash inflow
Any money that come into the business
Define cash outflow
Any money that comes out of the business
Define net cash flow
The difference between the money brought in and the money spent for that month
What is the equation for net cash flow
Inflows- outflows
What is the equation for closing balance
Net cash flow for the month+ opening balance
Define source of finance
Where you can get money from
Define inflammation
Fluctuation in the value of goods/services
Define interest
The % reward for saving or the % cost of borrowing
What is the equation for interest
(Total repayment - borrowed amount)/Borrowed amount X100
Define internal finance
Relates to money that has come directly within the business. There is no cost to the business of using this money
Define external finance
Always comes from outside the business. There may involve a cost to a business
Define calatorol
Asset to secure the debt
Define short term finance
Quickly to pay back. 0-5 years
Define long term finance
Money either never be repaid back or repaid over a long period of time (3+ years), usually used for start-up costs and expansion
What are the 13 sources of finance
- Personal savings
- Capital retained from profit
- Bank loan???
- Bank over draft
- Hire purchase
- Leasing
- Share capital
- Venture capital
- Trade credit
- Selling asset
- Crowdfunding
- Mortgage
- Government grant
Define dividends
A return given to shareholder based on profits
Define aims
The strategic goals of a business; for example to grow
Define objectives
More specific step; for example to increase market share by 5% over the next year
Why are business aims and objectives important
- It gives specific targets by which business performance can be measured
- Settings objectives can be used to motivate workers to achieve
- Setting objectives clarifies business direction and decision making
What do all aims and objectives need to be
Specific Measurable Achievable Realistic Time-bound
Why might business have different aims and objectives
- Size of the business
- How old the business
- Type of business
- Level of competition
What is the equation for variable costs
Quantity sold X variable costs per unit
Closing balance =
Opening balance + net cash flow
