Finance Flashcards

1
Q

What is fixed costs?

A

A cost that does not change in relation to the level of output

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2
Q

What is variable costs?

A

A cost that does change in relation to level of output

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3
Q

What does revenue mean?

A

Money coming into the business from the sale of goods or services

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4
Q

What is the formula for gross profit?

A

Gross profit = revenue - cost of sales

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5
Q

What is the margin of safety?

A

It looks at how many sales can be lost before the business hits the break even point. This helps businesses understand their level of risk

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6
Q

What is the formula for net cash flow?

A

Inflow - outflow = net cash flow

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7
Q

What is the formula for closing balance?

A

Net cash flow + opening balance = closing balance

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8
Q

What does asset mean?

A

Something that the business owns that is worth money

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9
Q

What does stock mean?

A

Inventories

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10
Q

What are debtors?

A

People that owe the business money

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11
Q

What are creditors?

A

People that are owed money by the business

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12
Q

What are current assets?

A

Money currently in the business, or things that will be turned into money within a year, (e.g. stock/inventories, debtors)

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13
Q

What is net current assets?

A

Total current assets

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14
Q

What is current liability?

A

Something that needs to be paid within a year

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15
Q

What is longterm liability?

A

Something that is paid over a long period of time

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16
Q

How to calculate profit/loss?

A

Profit = revenue - cost

17
Q

How to calculate break-even point/output?

A

Break-even output = fixed costs/(selling price - variable cost)

18
Q

What is cash flow?

A

The money in and out of a business

19
Q

What does liquidity mean?

A

company’s ability to raise cash when it needs it

20
Q

What is an income statement?

A

A financial statement that shows the companies actual income and expenditures

21
Q

What is a cash flow statement?

A

the exact inflows and outflows of a company over a given time

22
Q

What is a statement of financial position?

A

It shows the value of a business on a particular date including assets and liabilites .

23
Q

What is a cash flow forecast?

A

a prediction of inflows and outflows of a business