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Theme 2 Business > Definitions > Flashcards

Definitions Flashcards

1
Q

Capital

A

The money provided by owners of business

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2
Q

Capital expenditure

A

Spending on business resources that can be used repeatedly over a period of time

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3
Q

Internal finance

A

Money generated by the business or its current owners

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4
Q

Retained profit

A

Profit after tax that is ‘ploughed back’ into the business

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5
Q

Revenue expenditure

A

Spending on business resources that have already been consumed or will be very shortly

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6
Q

Sale and leaseback

A

The practice of selling assets such as property of machinery, and leasing them back to buyer

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7
Q

Authorised share capital

A

The maximum amount that can be legally raised

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8
Q

Bank overdraft

A

An agreement between a business and a bank that means a business an spend more than the money it has in its account. The overdraft limit is agreed and interest is only charged when the business goes overdrawn

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9
Q

Capital gain

A

The profit made from selling a share for more than it wad bought

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10
Q

Crowd funding

A

Where a large number of individuals (the crowd) invest in a business of project on the internet, avoiding the use of bank

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11
Q

Debentures

A

A long-term loan to business

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12
Q

Equities

A

Another name for an ordinary share

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13
Q

External finance

A

Money raised outside the business

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14
Q

Issued share capital

A

Amount of current share capital arising from the sale of shares

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15
Q

Lease

A

A contract to acquire the use of resources such as property or equipment

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16
Q

Peer-to-peer lending

A

Where individuals lend to other individuals without prior knowledge of them, on the internet

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17
Q

Permanent capital

A

Share capital that is never repaid by the company

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18
Q

Secured loans

A

A loan where lender requires security, such as property, to provide protections in case the borrower defaults

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19
Q

Share capital

A

Money introduced into the business through the sale of shares

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20
Q

Unsecured loans

A

Where the lender has no protection if the borrower fails to repay the money owed

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21
Q

Venture capitalism

A

Provides of funds for small or medium-sized companies that may be considered too risky for investors

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22
Q

Collateral

A

An asset that might be sold to pay a lender when a loans cannot be repaid

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23
Q

Incorporated business

A

A business.model in which the business and owners have separate legal identities

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24
Q

Limited liability

A

A legal status that means shareholders can only lose the original amount they invested in a business

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25
Unlimited liability
A legal status which means that business owners are liable for all business debts
26
Rights issue
Issuing new shares to existing shareholders at a discount
27
Long-term finance
Money borrowed for more than one year
28
Short-term finance
Money borrowed for 12 months or less
29
Undercapitalised
A business not raising enough capital when setting up
30
Unincorporated business
A business model in which there is no legal difference between the owners and business
31
Business plan
A plan for the development of a business, giving details such as products to be made, resources needed, and forecast such as costs, revenues and cash flow
32
Cash- flow forecasts
The prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month
33
Cash inflows
The flow of money into business
34
Chus outflows
The flow of money out of business
35
Net cash flow
The difference between the cash flowing in and cash flowing out of business in a given time period
36
Solvency
The degree to which a business is able to meet its debts wen they fall due
37
Consumer income
The amount of income remaining after taxes and expenses have been deducted from wages
38
Consumer trends
The habits or behaviours of consumers that determine the goods and services they buy
39
Economic growth
The rise in output of an economy as measured by the growth in Gross Domestic Product usually as a percentage
40
Economic variables
Measures within the economy which have effects on business and consumers. Examples include inflation, unemployment and exchange rates
41
Extrapolation
Forecasting future trends based on past data
42
Forecasting
A business process, assessing the probable outcome using assumptions about future
43
Sales forecast
Projection of future sales revenue, often based on previous data
44
Time series data
A method that allows a business to predict future level from past figures
45
Average cost/unit cost
The cost of producing one unit, calculated by dividing total cost by output
46
Fixed cost
A cost that does not change as a result of a change in output in the short run
47
Long run
The time period where all factors of production are available
48
Profit
The difference between total costs and total revenue
49
Sales revenue
Value of output sold in a particular time period
50
Sales volume
The quantity output sold in a particular time period
51
Semi-variable cost
A cost that consists of both fixed and variable elements
52
Short run
The time period where ate least one production factor is fixed
53
Total cost
The entire cost of producing a given level of output
54
Total revenue
The amount of money the business receives form selling output
55
Variable cost
A cost that rises as output rises
56
Break-even
When a business generates just enough revenue to cover its total costs
57
Break-even chart
A graph containing the total cost and total revenue lines, illustrating the break-even output
58
Break even output
Output a business needs to produce so that its total costs and total revenue are the same
59
Break even point
Total revenue = total costs
60
Contribution
The amount of money left over variable costs have been subtracted from revenue. This money contributes towards fixed costs and profits
61
Margin of safety
The range of output between break-even level and the current level of output, over which a profit is made

Theme 2 Business (7 decks)

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