Business Terms

Question 1

What is share capital

Answer 1

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

Question 2

What is venture capital

Answer 2

Money to invest in a business is sourced from individual, or groups of people, who wish to invest their own money into new businesses

Question 3

What is return on investment

Answer 3

The amount of money that an investor gets back in return for investing in a business

Question 4

What is trade credit

Answer 4

A credit arrangement that is offered only to businesses by suppliers

Question 5

What is an overdraft

Answer 5

A facility offered by a bank that allowed an account holder to borrow money at short notice

Question 6

What is an insolvent

Answer 6

A business that is unable to pay its debts and/or owes more money than it is owned

Question 7

What is an asset

Answer 7

Any item of value that a business owns, such as its machinery or premises

Question 8

What is a guarantor

Answer 8

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

Question 9

What is retained profit

Answer 9

Money that a business keeps, rather than paying out to its shareholders

Question 10

What is an aim?

Answer 10

Overall purpose for the business, the long term goal

Question 11

What is a mission statement

Answer 11

General description of the overall aims of the business; can just be one sentence

Question 12

What are objectives

Answer 12

Specific measurable targets to help meet the aims of the business

Question 13

What are SMART objectives and what’s the purpose of setting them

Answer 13

Specific, measurable, achievable, relevant, timed

Direction, focus for employees, allows planning, measurement of success

Question 14

What factors affect the aims and objectives of a business

Answer 14

Size, competition, type

Question 15

What is an entrepreneur

Answer 15

Someone who takes a calculated risk through starting a business

Question 16

What’s the purpose of a business

Answer 16

To produce goods or services to customers, make profits, help community

Question 17

What are some short term sources of finances?

Answer 17

Overdraft, trade credit, personal savings

Question 18

What are some long term sources of finance?

Answer 18

Share capital, venture capital, loans, retained profit, crowdfunding

Question 19

What are some financial objectives

Answer 19

Profit, sales, market share, survival

Question 20

What are some non financial objectives

Answer 20

Customer satisfaction, social objectives, personal achievement

Question 21

What are features of long term sources of finance?

Answer 21

Larger sums of money, not always repayed, repayed over multiple years

Question 22

What are features of short term sources of finance?

Answer 22

Smaller sums of money, always repayable, usually within one year

Question 23

What is profit?

Answer 23

Difference between total revenue and total costs
Total revenue - total costs
The amount of revenue left over once costs have been deducted

Question 24

What is market share?

Answer 24

The proportion of sales in a market that are taken by one business

Question 25

What are social objectives?

Answer 25

Non financial, eg reduce carbon emissions

Question 26

What’s income steam?

Answer 26

The source of regular income that a business receives, this could be through the money it receives from customers or investment income

Question 27

What is credit?

Answer 27

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

Question 28

What is security?

Answer 28

When the lenders ask the borrower to put up an asset such as a house or valuable item owned by the business

Question 29

What’s an asset?

Answer 29

Any item of value that a business owns, such as its machinery or premises

Question 30

What is a guarantor?

Answer 30

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

Question 31

Meaning of viable

Answer 31

Capable or working or succeeding