Business growth and decline Flashcards
Module 1 Chapter 4
acquisition
when one business takes control of another business by purchasing a controlling interest in it
bankruptcy
a declaration that a business or person is unable to pay his or her debts
business life cycle
refers to the stages of growth and development a business can experience
cash flow
the money coming into the business in the form of cash receipts, and the money leaving the business as cash payments
creditors
those people or businesses who are owed money
diversification
when a business acquires or merges with a business in a completely unrelated industry
horizontal integration
when a business acquires or merges with another business that makes and sells similar products
insolvent
when a company is not able to pay its debts as and when they fall due
involuntary cessation
when the owner is forced to cease trading by the creditors of the business
liquidation
when an independent and suitably qualified person – the liquidator – is appointed to take control of the business with the intention of selling all the company’s assets in an orderly and fair way in order to pay the creditors
merger
when the owners of two separate businesses agree to combine their resources and form a new organisation
realisation
the process of converting the assets of a business into cash
receivership
when a business has a receiver take charge of the affairs of the business. Unlike liquidation, the business may not necessarily be wound up.
vertical integration
when a business expands at different but related levels in the production and marketing of a product
voluntary administration
when an independent administrator is appointed to operate the business in the hope of trading out of present financial problems
voluntary cessation
when the owner ceases to operate the business of their own accord
