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3 business finance Flashcards

1
Q

25.210. Instalment

A

One of a series of regular payment made until all the money owed has been repaid

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2
Q
  1. Short-term finance
A

Money borrowed for one year or less

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3
Q
  1. Long-term finance
A

Money borrowed for more than one year

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4
Q
  1. Capital
A

Finance provided by the owners of a business

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5
Q
  1. Internal finance
A

Finance generated by the business from its own means

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6
Q
  1. Retained profit
A

Profit held by a business rather than returning it to the owners and which may be used in the future

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7
Q
  1. Assets
A

Resources used or owned by a business, such as cash, stock, machinery tools and equipment

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8
Q
  1. External finance
A

Finance obtained from outside the business

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9
Q
  1. Bank overdraft
A

Agreement with a bank where a business spends more money than it has in its account (up to an agreed limit)

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10
Q
  1. Trade payables
A

Buying resources from suppliers, such as raw materials and components, and paying for them at a later date (sometimes called trade credit)

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11
Q
  1. Mortgage
A

Long-term loan secured with property

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12
Q
  1. Repossess
A

To take back cars, furniture or property from people who had arranged to pay for them over a long time, but cannot now continue to pay for them

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13
Q
  1. Debenture
A

Long-term security yielding a fixed rate of interest, issued by a company and secured against assets

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14
Q
  1. Hire purchase
A

Buying specific goods with a loan, often provided by a finance house

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15
Q
  1. Rights issue
A

Sale of new shares to existing shareholders at a discount

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16
Q
  1. Venture capitalists
A

Specialist investors (individuals or companies) who provide money for business purposes, often to new businesses

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17
Q
  1. Crowd funding
A

Where a large number of individuals (the crowd) invest in a business venture using an online platform and therefore avoiding using a bank

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18
Q

Ch26. 218. Cash flow

A

Flow of money into and out of a business

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19
Q
  1. Liquid
A

Asset that is easily changed into cash

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20
Q
  1. Overheads
A

Money spent regularly on rent, insurance, electricity and other things that are needed to keep a business operating

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21
Q
  1. Insolvent
A

Inability to meet debts

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22
Q
  1. Cash flow forecast
A

Prediction of all expected receipts and expenses of a business over a future time period, which shows the expected cash balance at the end of each month

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23
Q
  1. Cash inflow
A

Flow of money into a business

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24
Q
  1. Cash outflow
A

Flow of money out of a business

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25
Q
  1. Drawings
A

Money taken out of the business by the owner for personal use

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26
Q
  1. Closing cash balance
A

Amount of cash that the business expects to have at the end of each month (takes into account the cash inflows and cash outflows)

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27
Q

Ch27. 225. Costs

A

Expenses that must be met when setting up and running a business

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28
Q
  1. Fixed costs
A

Costs that do not vary with the level of output

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29
Q
  1. Variable costs
A

Costs that change when output levels change

30
Q
  1. Total costs
A

Fixed costs and variable cost added together

31
Q
  1. Total revenue
A

Money generated from the sale of output. It is price multiplied by quantity

32
Q

Ch28. 231. Amortization

A

Is a cost associated with the falling in value of certain types of asset

33
Q
  1. Break-even point
A

Level of output where total costs and total revenue are exactly the same: neither a profit nor a loss is made

34
Q
  1. Break-even chart
A

Graph that shows total cost and total revenue; break-even point is where total cost and total revenue intersect

35
Q
  1. Margin of safety
A

Amount of output available to be sold above the break-even point where the business makes a profit

36
Q
  1. Bulk buying
A

Buying goods in large quantities, which is usually cheaper than buying in small quantities

37
Q
  1. Stockpile
A

Large supply of goods and so forth that are being kept for use or possible use in the future

38
Q

Ch29. 239. Statement of comprehensive income

A

Financial document showing a firm’s income and expenditure in a particular time period

39
Q
  1. Profit
A

Money left over after all costs have been subtracted from revenue

40
Q
  1. Gross profit
A

Sales revenue less cost of sales

41
Q
  1. Operating profit
A

Gross profit less expenses

42
Q
  1. Distributed profit
A

Profit that is returned to the owners of a business

43
Q
  1. Retained profit
A

Profit held by a business rather than returning it to the owners and which may be used in the future

44
Q
  1. Dividend
A

Share of the profit paid to shareholders in a company

45
Q
  1. Finance cost
A

Interest paid on loans

46
Q
  1. Finance income
A

Interest received by the business on deposit accounts

47
Q
  1. Normal profit
A

Minimum profit a business needs to make to retain the interest of the owner(s)

48
Q
  1. Adjustments
A

Includes adjustments for the profits made on the disposal of assets

49
Q

Ch30. 247. Statement of financial position

A

Summary at a point in time of business assets, liabilities and capital (often called the balance sheet)

50
Q
  1. Assets
A

Resources used or owned by a business, such as cash, stock, machinery, tools and equipment

51
Q
  1. Liabilities
A

Debts of the business, which provide a source of funds

52
Q
  1. Capital
A

Finance provided by the owners of the business

53
Q
  1. Non-current assets
A

Assets that last for more than one year

54
Q
  1. Current assets
A

Assets likely to be changed into cash within a year

55
Q
  1. Liquidity
A

Ease or speed with which assets can be sold for cash

56
Q
  1. Trade receivables
A

Amounts of money that are owed to a company by its customers

57
Q
  1. Current liabilities
A

Debts that have to be repaid within a year

58
Q
  1. Net current assets
A

Current assets minus current liabilities, also known as working capital

59
Q
  1. Non-current liabilities
A

Debts that are payable after 12 months

60
Q
  1. Net assets
A

Value of all assets less the value of all liabilities; total at the bottom of the first part of the balance sheet

61
Q
  1. Goodwill
A

Value that a company has because it has a good relationship with its customers and suppliers

62
Q

Ch31. 255. Ratio analysis

A

Mathematical approach to investigating accounts by comparing two related figures

63
Q
  1. Gross profit margin
A

(Or mark-up) gross profit expresses as a percentage of turnover

64
Q
  1. Operating profit margin
A

Operating profit expressed as a percentage of turnover

65
Q
  1. Current ratio
A

Assesses the firm’s liquidity by dividing current liabilities into current assets

66
Q
  1. Acid test ratio
A

Similar to the current ratio but excludes stocks from current assets (sometimes called the quick ratio)

67
Q
  1. Return on capital employed (ROCE)
A

Profit of a business as a percentage of the total amount of money used to generate it

68
Q
    1. Quantitative information
A

Information expressed in numbers

69
Q
  1. Excise duties
A

Taxes on selected goods, such as those on petrol and tobacco in the UK

70
Q
  1. Auditing
A

Accounting procedure that checks thoroughly the accuracy of a company’s accounts

Business (7 decks)

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