Business Terms Flashcards
What is share capital
Money to invest in a business is raised by the business issuing shares that it then sells to those who wish to invest in the company
What is venture capital
Money to invest in a business is sourced from individual, or groups of people, who wish to invest their own money into new businesses
What is return on investment
The amount of money that an investor gets back in return for investing in a business
What is trade credit
A credit arrangement that is offered only to businesses by suppliers
What is an overdraft
A facility offered by a bank that allowed an account holder to borrow money at short notice
What is an insolvent
A business that is unable to pay its debts and/or owes more money than it is owned
What is an asset
Any item of value that a business owns, such as its machinery or premises
What is a guarantor
A named person who guarantees to pay the repayments in a loan should the person who has taken out the loan not be able to make the payments
What is retained profit
Money that a business keeps, rather than paying out to its shareholders
What is an aim?
Overall purpose for the business, the long term goal
What is a mission statement
General description of the overall aims of the business; can just be one sentence
What are objectives
Specific measurable targets to help meet the aims of the business
What are SMART objectives and what’s the purpose of setting them
Specific, measurable, achievable, relevant, timed
Direction, focus for employees, allows planning, measurement of success
What factors affect the aims and objectives of a business
Size, competition, type
What is an entrepreneur
Someone who takes a calculated risk through starting a business
What’s the purpose of a business
To produce goods or services to customers, make profits, help community
What are some short term sources of finances?
Overdraft, trade credit, personal savings
What are some long term sources of finance?
Share capital, venture capital, loans, retained profit, crowdfunding
What are some financial objectives
Profit, sales, market share, survival
What are some non financial objectives
Customer satisfaction, social objectives, personal achievement
What are features of long term sources of finance?
Larger sums of money, not always repayed, repayed over multiple years
What are features of short term sources of finance?
Smaller sums of money, always repayable, usually within one year
What is profit?
Difference between total revenue and total costs
Total revenue - total costs
The amount of revenue left over once costs have been deducted
What is market share?
The proportion of sales in a market that are taken by one business
What are social objectives?
Non financial, eg reduce carbon emissions
What’s income steam?
The source of regular income that a business receives, this could be through the money it receives from customers or investment income
What is credit?
The amount of money that a financial institution or supplier will allow a business to use which it must pay back in the future at an agreed time
What is security?
When the lenders ask the borrower to put up an asset such as a house or valuable item owned by the business
What’s an asset?
Any item of value that a business owns, such as its machinery or premises
What is a guarantor?
Named person who guarantees to pay the repayments on a loan should the person who has taken out the loan not be able to make payments
Meaning of viable
Capable or working or succeeding
