Finance Flashcards
What is fixed costs?
A cost that does not change in relation to the level of output
What is variable costs?
A cost that does change in relation to level of output
What does revenue mean?
Money coming into the business from the sale of goods or services
What is the formula for gross profit?
Gross profit = revenue - cost of sales
What is the margin of safety?
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
What is the formula for net cash flow?
Inflow - outflow = net cash flow
What is the formula for closing balance?
Net cash flow + opening balance = closing balance
What does asset mean?
Something that the business owns that is worth money
What does stock mean?
Inventories
What are debtors?
People that owe the business money
What are creditors?
People that are owed money by the business
What are current assets?
Money currently in the business, or things that will be turned into money within a year, (e.g. stock/inventories, debtors)
What is net current assets?
Total current assets
What is current liability?
Something that needs to be paid within a year
What is longterm liability?
Something that is paid over a long period of time
How to calculate profit/loss?
Profit = revenue - cost
How to calculate break-even point/output?
Break-even output = fixed costs/(selling price - variable cost)
What is cash flow?
The money in and out of a business
What does liquidity mean?
company’s ability to raise cash when it needs it
What is an income statement?
A financial statement that shows the companies actual income and expenditures
What is a cash flow statement?
the exact inflows and outflows of a company over a given time
What is a statement of financial position?
It shows the value of a business on a particular date including assets and liabilites .
What is a cash flow forecast?
a prediction of inflows and outflows of a business
