Business Finance Paper Terminology Flashcards
Advance variance
Actual figures are worse than budgeted
Appreciation
Gradual rise in value/price of one currency in terms of another
Batch production
A method that involves completing one operation at a time on all units before preforming the next
Budgeting
Provides a target for costs or revenue that a business department must aim to reach over a given period of time
Buffer inventory
Stocks held as a preoccupation to cope with unforeseen demand
Business angles
Entrepreneurial individuals who provide capital in return for a proportion of the companies equity
Business plan
A document/plan for the development of the business
giving details such as the product, resources,cost,revenue,cash forecast
Capacity utilisation
The percentage of total capacity that is actually being used in a period
Depreciation
One currency’s value has gone lower in terms of another
Economic growth
The rise in output of an economy as measured by the growth in GDP, usually as a percentage
Flow production
Mass production
Where raw materials are transformed into a finished product via a continuous process
Grants
A sum of money given by governments or other organisations for a specific cause
Inflation
Increase in the general level of prices in an economy over a period of time
intellectual property rights
A form of legal protection that includes
Patents, copyrights and trademarks
Inventory control
The optimum quantity of goods/components a business holds for the purpose of resale/production
Job production
Involves a business producing items that meet the specific requirements of the customer
Just in time production
Involves holding no buffer inventory with suppliers arriving just before they are required by the business
Kaizen
A Japanese philosophy which places emphasis on
making small improvements in all business processes as it tries to achieve a culture of continuous improvement
Good process = good results
Labour intensive production
Requires a high amount of human capital
(Lots of employees: motivated, productive)
Lean production
Focusing of reducing resources that are being used
Leasing
Allows a company to rent without owning an asset
Legislation
Making laws for people to follow
Liquidity
Shows how quickly a business can access cash in order to reach its short term debts
Margin of safety
Range of output between the break even level and the current level of output over which a profit is made
Capital expenditure
Money on resources that can be used repeatedly
Revenue expenditure
Spending on resources that have already been consumed
Private Limited company
Separate legal identity from its owners
Forming a limited company
Memorandum of association +
Articles of association
= certificate of incorporation
Public limited company
Owned by shareholders where shares can be bought on the stock market
Flotation
Going public
Business publishes a prospectus
Prospectus
Detailed document that advertises the company to potential investors and invites them to buy shares
Limited liability
Businesses legal identity is separate from its owners
-private limited companies
Unlimited liability
No legal difference between owners and the business
Sales forecasting
Process of estimating future sales based on past data, industry comparisons or economic trends
Time series analysis
Predict the future trends based on chronological figures based on time
