definitions 1.3

Question 1

overdraft facility

Answer 1

an agreed maximum level of overdraft

Question 2

overdraft

Answer 2

when more money is taken out of a bank account that has been paid into

Question 3

insolvency

Answer 3

when a business lacks the cash to pay it’s debts

Question 4

cash flow

Answer 4

the movement of money into and out of the firms bank account

Question 5

cash

Answer 5

the money the firm holds in notes and coins, and it’s bank accounts

Question 6

break even

Answer 6

the level of sales at which total costs are equal to revenue. At the point the business is making neither a profit or a lose

Question 7

margin of safety

Answer 7

the amount by which demand can fall before the business starts making losses

Question 8

trade credit

Answer 8

when a supplier provides goods but is willing to wait to be paid

Question 9

dividends

Answer 9

payments made to share holders from the company’s yearly profit

Question 10

crowdfunding

Answer 10

raiding capital online from small investors

Question 11

share capital

Answer 11

selling part ownership in the business share holders have the right to question the directors

Question 12

venture capital

Answer 12

a combination of share capital and loan capital provided by an investor willing to take a chance on the success of a small to medium sized business

Question 13

fixed costs

Answer 13

costs that don’t vary just because output varies

Question 14

variable costs

Answer 14

costs that vary as output varies

Question 15

revenue

Answer 15

the total value of the sales within a period of time

Question 16

profit def

Answer 16

difference between revenue and total costs

Question 17

profit calc

Answer 17

revenue - costs

Question 18

smart objectives

Answer 18

specific, measurable, achievable, realistic and time bound

Question 19

objectives

Answer 19

clear measurable goal

Question 20

aims

Answer 20

a general statement of where you’re heading

Question 21

market share

Answer 21

the percentage of a market held by one company or brand

Question 22

survival

Answer 22

keeping the business going, which depends on determination and cash

Question 23

cash flow forecasting

Answer 23

predicting the future flows of cash into and out of the business bank account

Question 24

cash flow

Answer 24

difference between the flows of cash into and out of a business over a period of time

Question 25

revenue calculations

Answer 25

quantity * price

Question 26

margin of safety calc

Answer 26

sales - beak even

Question 27

break even calc units

Answer 27

fixed costs / ( price - variable costs )

Question 28

interest

Answer 28

a percentage of the original amount borrowed that must be paid back on top

Question 29

net cash flow calc

Answer 29

inflows - outflows

Question 30

interest rate

Answer 30

a value which shows the cost of borrowing money or the reward given for saving money

Question 31

net profit margin

Answer 31

the fraction of every pound spent by customers that the company gets to keep

Question 32

cash inflow

Answer 32

money that flows into a business

Question 33

cash outflow

Answer 33

money that flows out of a business

Question 34

loan

Answer 34

a long term source of money that must be paid back later

Question 35

retained profit

Answer 35

profit that is put back into the business

Question 36

interest calc

Answer 36

total repayment - borrowed amount / borrowed amount

Question 37

total variables calc

Answer 37

quantity sold * variable cost per unit

Question 38

break even point for revenue calc

Answer 38

break even point in units * sales price

Question 39

closing balance =

Answer 39

opening balance + net cash flow

Question 40

credit terms

Answer 40

how long after agreeing to buy the product the customer has to pay

Question 41

break even point calc revenue

Answer 41

break even point in units * sales price