1.3 Gcse Business Flashcards
What is an overdraft?
It is when you spend more money than In your bank account. Payed back when you earn enough money to cover the cost. (Some have charges)
What is trade credit?
When buying stock from supplier. Is laid later. Which has not got interest
What is personal savings?
Money owner has kept saved for themselves
What is retained profit?
Money set aside / saved by bussines
What is share capital?
{long term finance}
Money raised by selling shares of ownership to shareholders (permanent capital) (pay no dividends) however business is vulnerable to takeover and loses control of business)
What is venture capital?
Specialist investors willing to take risk in finding new business. Provide skill and experience
What is loan?
Money lent to individual with a charged interest(fixed) provides regular payments and large sums of money
What is crowd funding?
Money from public raised due to interest or new creative idea from bussines. Funding finance
What is the difference between fixed costs and variable costs?
Fixed costs don’t change whilst variable costs do change on number stock sold.
What is the formula for total costs
Total cost=variable cost+fixed cost
What is the avarage rate of return?
Average yearly profit / cost of investment x100
What are aims?
A business’s broad ,overall goals
What are objectives?
More specific statements the business wants to achieve
(clear objectives helps business to achieve its aims and make key decisions)
List some business financial objectives?
-survival: ensures business operates
-profit: increase revenue(customers satisfaction)
-be the best in the market
-growth: enter new market. Improve cooperate image
-financial security
What is the equation for market share?
Company’s total sale
______________________(divide)
Industry total market sales
What are some non financial business objectives for small bussisinnes?
-reduce carbon footprint: minimize environmental impact
-personal satisfaction(building business)
-independence
-more control(sole trader)
-greater challenge
-customers are happy
What is meant by the term ‘break even’
Enough money is earns to cover all expenditures (costs)
Meaning the business doesn’t make profit or lose money
This is the first step of an successful business
What is the calculation to determine break even point is reached?
Fixed cost/ (selling price-variable costs)
What is the margin of safety?
The difference between break even point and predicted sales
If it is high
The bussines is lower risk, meaning they can sell fewer products than expected to break even and make a profit
What happens when a business becomes insolvent?
The business does not have enough funds to pay its bills for there working capital
What is cash?
The money a company can spend immediately
What is profit?
Amount of money company earns after cost taken into account
What is cash flow
Money that flows into and out of business
(Cash inflow or outflow)
[met cash flow =cash inflow-cash ouflow
What are credit terms?
Tells you how long after agreeing to buy product a customer has to pay
