3.1 What is business Flashcards
Profit
The financial gain earned by a business after deducting total costs from total revenue.
Cash flow
The movement of money in and out of a business, reflecting its liquidity and ability to meet
financial obligations.
Mission
The fundamental purpose or reason for the existence of an organisation, defining its core
values and guiding principles
Objectives
Specific, measurable goals set by an organisation to achieve its mission
Revenue
The total income generated by a business from its primary operations, typically from sales of
goods or services.
Fixed costs
Expenses that remain constant regardless of production or sales volume, such as rent or
salaries.
Variable costs
Expenses that fluctuate based on production or sales volume, such as raw materials
Sole trader
An individual business owner who operates and manages a business on their own, assuming
full responsibility for profits and losses.
Private limited company (ltd)
A business entity with limited liability, typically owned by a small group of shareholders, and
restricted from offering shares to the general public.
Public limited company (plc)
A corporation whose shares are traded on a public stock exchange, allowing a wide range of
investors to buy and sell ownership stakes in the company.
Private sector
The part of the economy that is owned and operated by private individuals or companies,
aiming to generate profits.
Public sector
The part of the economy that is owned and operated by the government, providing goods and
services to the public.
Non-profit organisation
An organisation that operates for purposes other than profit, such as charitable, educational
or social causes.
Social enterprise
A business entity that operates with a primary focus on addressing social or environmental
issues.
Unlimited liability
The legal obligation of business owners to personally cover all debts and liabilities of the
business, risking personal assets
Limited liability
The legal protection of business owners’ personal assets, restricting their liability to the
amount of their investment in the business.
Ordinary share capital
The equity capital raised by a company through the issuance of ordinary shares to
shareholders.
Market capitalisation
The total value of a company’s outstanding shares in the stock market, calculated by
multiplying the current share price by the number of shares.
Dividends
Payments made by a company to its shareholders as a distribution of profits, usually in the
form of cash or additional shares.
