definitions check up Flashcards
Define Dividends
a portion of the profits of a firmdistributed to shareholders
Define Shareholder
part-owners in a business who can vote at AGM and receive dividends.
Define incorporation
The legal registration of a business with Companies house so it can benefit from limited liability
Define unincorporated
A business that is not registered with companies house so has unlimited liability eg. sole trader
Define limited liability
shareholders can only lose money invested in the company instead of their entire personal wealth if the business collapses due to debt.
Define unlimited liability
Shareholders are responsible for finances if they are struggling. So they can lose personal assets.
Define profit & its formula
difference in a firms revenues from its trading activities and its total costs.
Also a reward for risk and a return on invested capital
T revenue - T costs
Define corporate tax
Tax paid by incorporated companies on top of profits
Define company
A legal entity owned by shareholders
Define a business
Organisation that exists to provide goods or services on a commercial basis to customers
Define start-up
A new business enterprise, formed by one or more entrepreneurs
Define mutuals
Organisations owned by and run for benefits of future and current members like sport clubs
Define share
a certificate that indicates part-ownership of a company. Entitles to dividends and AGM vote.
define capital
money used to run and build a business
define capital growth
increase of value of business shares (bought - sold)
Define stakeholders
Anyone with interest in a business
Define collateral
Assets a business uses to secure a loan.
define objectives
short-term specific measurable target.
eg. 1m sales in next month
define mission
the main purpose of the organisation
define variable costs
costs that change directly with output. They will increase by a set amount each time a new unit is made.
define ethical
morally correct behaviour
define fair trade
buying raw materials at a price that allows a reasonable standard of living for the suppliers.
Often above the regular market price.
define company growth
increase over time of revenues within a business.
economic growth regards an increase in size of the whole economy.
define market capitalisation & formula
the value of a company as a measure by the stock market
number of shares x share price
define non-profit organisations
an incorporated organisation that exists for interest of members or as a charity.
define private limited company
a limited liability business where shares are not freely available for sale, decisions made by owners.
define the private sector
any organisation that is not government run or owned
define revenue & its formula
Income generated by sales of a product
price x quantity sold.
define public sector organisations
governmentally owned
define sole trader
an individual running a business, operating under unlimited liability so are personally responsible for business debts.
define public limited companies
large firm whose shares can be bought and sold by public on stock exchange. Owners appoint managers to run business.
Define the transformation process
describes what happens inside the business. Where the value is added to inputs to create outputs.
what does CELL stand for (the transformation process)
capital, enterprise, land, labour
define fixed costs
costs that do not change directly with output levels
what does SMART stand for? (objectives)
specific, measurable, achievable, relevant, time bound.
what is profitability?
efficiency of a business at generating profit in relation to the size of the business.
