Chapter 6 - Finance Flashcards
1
Q
Name tow methods of internal sources of finance
A
Savings, retained profits, selling assets
2
Q
Name two methods of external sources of finance
A
Banks, family loans, new partners, grants
3
Q
What is the break even formula
A
Fixed cost / (sales - variable) = break even
4
Q
What is cash
A
It is the money a business cna spend immediately
5
Q
What is cash flow
A
It is the flow of money in and out of the business
6
Q
How are cahs flow forecasts helpful
A
Cash flow forecasts identify when the business may face a liquidity problem
7
Q
What are credit terms
A
Credit terms are the agreed amount of time between purchase and payment
8
Q
What causes poor cash flow
A
- Poor sales
- Overtrading
- Poor decisions
