Chapter 8: Finance

Question 1

Retained Profit

Answer 1

Profit kept in the business after tax and dividends have been paid.

Question 2

Sale and Leaseback

Answer 2

Selling an asset, such as a building, to a leasing company and paying an annual leasing charge so that the asset can still be used.

Question 3

Profit and Loss Account

Answer 3

This shows whether the business made a profit or loss over the last period. It is also known as the income statement.

Question 4

Sales Revenue

Answer 4

The value of goods sold.

Question 5

Cost of Sales

Answer 5

The cost to the business of the goods sold.

Question 6

Gross Profit

Answer 6

The difference between sales revenue and cost of making the products sold.

Question 7

Overheads

Answer 7

Expenses of the business that are not directly part of the production process.

Question 8

Net profit

Answer 8

The difference between sales revenue and the total costs of the business.

Question 9

Gross Profit Margin

Answer 9

The percentage of sales revenue that is gross profit.

Question 10

Net Profit Margin

Answer 10

The percentage of sales revenue that is net profit.

Question 11

Balance Sheet

Answer 11

This lists the value of a company’s assets and liabilities.

Question 12

Assets

Answer 12

Item of value owned by a business.

Question 13

Liabilities

Answer 13

Debts owned by a business.

Question 14

Liquidity

Answer 14

How easy it is for a business to pay it’s short-term debts.