2.3 Flashcards
Cash
Amount of money in the bank in coins and notes
Cost of Sales
Cost of inventory bought or produced
Profit
Money left after taking away total costs from revenue
Profitability
A measure of how efficiently a company generates profit relative to its revenue or investment
Statement of comprehensive income
A document to show income and expenditure of a business over financial year
Tax
A charge made by government on activities , earnings, and income of individuals and businesses
Assets
Valuable things a business can use
Capital
Cash put into a business by the owner
Current Assets
Assets that can be converted into cash within 12 months
Current Liabilities
Debts owed by a business that must be repaid within one year
Liabilities
Debts owed by a business to lenders and suppliers
Liquidity
How easily a company can convert its assets into cash and pay off day to day expenditure
Non current Assets
Long term assets that will be used by business for longer than a year e.g property , equipment
Non current liabilities
Debts owed by the business for more than one year e.g loan
Shareholder equity
The value of shareholders investment in business
Statement of financial position
A summary at a particular point in time of the value of a firms assets , liabilities and equity
Working capital
Amount of cash available to pay for the day to day trading of a business that gives some indication of the liquidity level within the business
External causes for business failure
Factors outside control of the business which might cause it to fail e.g competition , legislation
Financial Factors for business failure
Factors which might contribute to a business running out of cash e.g late payments , inability to borrow
Internal causes of business failure
Factors which a business can control e.g poor decision making , loss of key staff
Non financial factors of business failure
Can come from inside or outside of business e.g poor management or external shocks
Overtrading
The situation where a business does not have enough cash to support its production ans sales , usually because it is growing too fast
