Business Finance (AS LEVEL) Flashcards
Whats start-up capital?
capital needed by any entrepreneur to start a business
Whats working capital?
the capital needed to pay for raw materials and day-to-day running cost .
What is short term capital?
This is finance required for short periods of time of up to a year
What is long term capital?
money required for more than a year
Whats profit
value of goods sold less costs
liquidity
the ability of a business to pay its short term debts
administration
when administrators manage a business that is unable to pay its debts with the intention of selling it as a going concern
Bankruptcy
legal procedure for liquidating a business which cannot fully pay its debts out of its current asset
liquation
when a business ceases trading and its assets are sold for cash to pay suppliers and other creditors
current assets
assets that can easily be turned into cash within a year.
ex: cash, trade receivables , inventory
current liability
debts have to be paid within a year
capital expenditure
the purchase of non current assets that are expected to last for more than a year
revenue expenditure
spending on all costs and assets other than non-current assets.
ex; wages
internal sources
raising finance from a business’s own asset or from profits left in the business(retained earning)
external sources
raising finance from sources outside the business
ex: bank
