Costs Flashcards
Where can businesses get funding from ?
Government Shareholders Friends and family Banks Investors
Why is cash flow management important?
Insight into cash flow position
Shows if a business can survive in the short term
Helps structure repayments
What is the equation for closing bank balance ?
Net cash flow + opening bank balance
What is the equation for opening bank balance?
Previous closing bank balance
What is the equation for total inflow?
Add up all of the inflows
What is the equation for total outflow?
Add up all of the outflows
What is the equation for net cash flow?
Inflow - outflow
What is cash flow forecasting ?
A prediction of the money that flow in and out of the business over a period of time
What are the main causes of cash flow problems?
Low profits
Seasonal demand
Allowing customers too much credit
Too much production capacity
What are the limitations of creating a cash flow forecast?
May not always be accurate Lacks validity Limited information Very time consuming Provides short term analysis
What is statement of comprehensive income?
Provides a summary of a company’s net assets over a given period of time
What is cost of sales?
The carrying value of goods sold during a particular period
What is gross profit?
Gross profit is the profit the company makes after deducting the costs associated with making and selling its products
What is net profit?
The number of sales money remaining after all operating expenses, interest, tax, and stock dividends have been deducted from total revenue
What is working capital?
A measures of a company’s liquidity and short term financial health
What is capital and reserves?
The difference between total assets and total liabilities in the balance sheet
What is non current assets?
A company’s long term investments for which the full value may not be realised within the accounting year
What is a non current asset ?
Property
Equipment
Investment
What is a current asset?
Cash or other assets expected to be converted to cash within a year
What is an example of a current asset?
Stock
Cash at bank
What is current liability?
Amounts due to be paid to creditors within twelve months
What are examples of current liability?
Short term loans
Over draft
What is non current liability?
Obligations of the company which are expected to get paid after the period of a year
What are examples of non current liability?
Long term loans
Mortgage
What are receivables?
Legally enforceable claims for payment held by a business for goods supplied that customers have ordered not paid
What is residual value?
What you can sell the item for in the future
