Entrepreneur Flashcards
Break-even point
The minimum sales revenue or total units sold needed for a business to be able to cover its own expenses and begin to make a profit.
Cash flow forecast
Process of estimating the cash that will be coming into a business and the cash that will be flowing out of the business during the same period of time.
Debt financing
Obtaining funds to start or operate a business by borrowing money that has to be paid back to a lender. The entrepreneur is responsible for paying back the debt and interest even if there is no profit. The lender typically has no ownership in the business.
Demand
The quantity of a good or service buyers are willing to purchase at various prices.
Equity financing
Obtaining funds to start or operate a business by selling shares of ownership in the business; equity investors share in the profits.
Expense
Product costs plus operating expenses.
Interest
Price being paid to the lender for using his or her money.
Loss
Total expenses minus total revenue expended, over a period of time, when total revenue is less than the total expenses; this is the net financial loss the business has experienced through its operation over that period of time.
Market price
That price at which the quantity that buyers are willing to buy is equal to the quantity that sellers are willing to supply.
Operating expenses
Costs that are required to cover the basic, ongoing operation of the business such as rent, advertising and utilities.
Opportunity cost
The next best alternative use given up when resources are used for an item or activity.
Product costs
Usually refers to the cost of the actual materials and labor used to produce the goods that are sold to customers.
Profit
Total revenue minus total expenses, over a period of time, when total revenue is greater than total expenses; this is the net income a business has earned over that period of time, after covering all expenses.
Revenue
Total dollar amount a business receives from the sale of its goods or services over a particular period of time.
Start-up costs
Total amount of money needed to get a business up and running.
