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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
220. Drawings
Money taken out of the business by the owner for personal use
26
221. Closing cash balance
Amount of cash that the business expects to have at the end of each month (takes into account the cash inflows and cash outflows)
27
Ch27. 225. Costs
Expenses that must be met when setting up and running a business
28
226. Fixed costs
Costs that do not vary with the level of output
29
226. Variable costs
Costs that change when output levels change
30
226. Total costs
Fixed costs and variable cost added together
31
228. Total revenue
Money generated from the sale of output. It is price multiplied by quantity
32
Ch28. 231. Amortization
Is a cost associated with the falling in value of certain types of asset
33
232. Break-even point
Level of output where total costs and total revenue are exactly the same: neither a profit nor a loss is made
34
233. Break-even chart
Graph that shows total cost and total revenue; break-even point is where total cost and total revenue intersect
35
233. Margin of safety
Amount of output available to be sold above the break-even point where the business makes a profit
36
236. Bulk buying
Buying goods in large quantities, which is usually cheaper than buying in small quantities
37
236. Stockpile
Large supply of goods and so forth that are being kept for use or possible use in the future
38
Ch29. 239. Statement of comprehensive income
Financial document showing a firm’s income and expenditure in a particular time period
39
239. Profit
Money left over after all costs have been subtracted from revenue
40
239. Gross profit
Sales revenue less cost of sales
41
239. Operating profit
Gross profit less expenses
42
239. Distributed profit
Profit that is returned to the owners of a business
43
239. Retained profit
Profit held by a business rather than returning it to the owners and which may be used in the future
44
239. Dividend
Share of the profit paid to shareholders in a company
45
241. Finance cost
Interest paid on loans
46
241. Finance income
Interest received by the business on deposit accounts
47
243. Normal profit
Minimum profit a business needs to make to retain the interest of the owner(s)
48
245. Adjustments
Includes adjustments for the profits made on the disposal of assets
49
Ch30. 247. Statement of financial position
Summary at a point in time of business assets, liabilities and capital (often called the balance sheet)
50
247. Assets
Resources used or owned by a business, such as cash, stock, machinery, tools and equipment
51
247. Liabilities
Debts of the business, which provide a source of funds
52
247. Capital
Finance provided by the owners of the business
53
248. Non-current assets
Assets that last for more than one year
54
248. Current assets
Assets likely to be changed into cash within a year
55
248. Liquidity
Ease or speed with which assets can be sold for cash
56
248. Trade receivables
Amounts of money that are owed to a company by its customers
57
249. Current liabilities
Debts that have to be repaid within a year
58
249. Net current assets
Current assets minus current liabilities, also known as working capital
59
249. Non-current liabilities
Debts that are payable after 12 months
60
249. Net assets
Value of all assets less the value of all liabilities; total at the bottom of the first part of the balance sheet
61
251. Goodwill
Value that a company has because it has a good relationship with its customers and suppliers
62
Ch31. 255. Ratio analysis
Mathematical approach to investigating accounts by comparing two related figures
63
255. Gross profit margin
(Or mark-up) gross profit expresses as a percentage of turnover
64
256. Operating profit margin
Operating profit expressed as a percentage of turnover
65
257. Current ratio
Assesses the firm’s liquidity by dividing current liabilities into current assets
66
258. Acid test ratio
Similar to the current ratio but excludes stocks from current assets (sometimes called the quick ratio)
67
259. Return on capital employed (ROCE)
Profit of a business as a percentage of the total amount of money used to generate it
68
32. 265. Quantitative information
Information expressed in numbers
69
266. Excise duties
Taxes on selected goods, such as those on petrol and tobacco in the UK
70
266. Auditing
Accounting procedure that checks thoroughly the accuracy of a company’s accounts

Business (7 decks)

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