Finance Flashcards
What sources of finance would a sole trader use
-savings.
-bank loans.
-family and friends loans
What finance would a partnership use
-savings
-loan banks
-overdraft
What finance would a enterprise use
Government grants.
Savings.
Sales
What is a cash budget
An estimate of a company’s cash coming in and out of the business
What is surplus
The amount of money left over once bills are paid
What’s a deficit
When there isn’t enough money
What’s the receipts in?
Grant
Sales
Total receipts
Receipts out?
Rent
Telephone
Advertisement
Electricity etc.
Cash budget sum
Opening balance + receipts in - receipts out = closing balance
Benefits of using a cash budget
-helps predict high or low periods.
Reasons for poor cash flow.
-spending too much money on stock that has not sold.
-giving customers too long to pay debts.
-not enough time to pay bills.
How to manage poor cash flow
-cheaper supplies.
-sell equipment
-take out a bank loan
What is gross profit
Profit from buying and selling
Cost of ict within a business
-replacing and upgrading systems.
-new furniture to house equipment.
-staff training.
-computer viruses
Benefits of using ict
Increased efficiency.
-increased flexibility
-access to new markets
Advantages of capital intensive
Machinery doesn’t need breaks.
Fewer employees need to be paid.
Disadvantages of capital
Expensive to buy machines.
-customer requirements can’t be met
Advantages of Labour
Employees can be creative.
Labour is always available.
Disadvantages of Labour
Expensive to recruit.
Quality of work can vary
Stages of production
Input process and output.
Factors to consider whilst choosing a supplier.
Price,quality, delivery time, quantity, storage space, reliability
Types of operations
Job, flow and batch
Advantages of job production
Customer exact demands can be met.
Hugh prices can be charged.
Designs can be changed.
Disadvantages of job production
Products take longer to be made.
Bulk purchases of stock aren’t always available.
Advantages of batch production
Can be changed to suit customers.
Cost savings can be made.
Disadvantages of batch production
Resources may have nothing to do between each batch.
A fault in one item can lead to whole batch being wasted.
Advantages of flow production
Large quantities of identical products.
Machinery can work 24-7
Disadvantages of flow
Products can’t be made to customers individual requirements.
Fault or breakdown could stop whole line of production.
