Finance Flashcards
What is share issue?
Selling shares to a shareholder
Finance does not need repayed
Shareholder gets payed dividend each year
What is a bank overdraft?
Allow business to withdraw more money than in the account
Quick and efficient to arrange
Expensive as high daily tax rate
What is crowd funding?
Small amounts donated by large amount of people
Access to large amounts of interest
Purpose of cash budget
Identify periods of surplus
Identify periods of deficit
Take correct action
To make comparisons between actual and budgeted
Key terms of cash budget
Opening balance
Incomes/receipts
Expenditure/payments
Closing balance
Possible cash flow problems
Expenditure greater than income
Falling sales
Increasing purchases (raw mats)
Increasing expenses (electricity)
Capital expenditure
Bad debts
How to fix cash problems
Arrange bank loan/overdraft
Promotional deals
Cheaper supplier
Cheaper utility supplier
Higher purchase
Discounts for cash purchases
Use JIT (just in time)
Whats the purpose of a income statement?
Calculate gross profit
Calculate profit for the year
Can be used for tax purposes
Calculate costs of goods sold
Calculate expenses
Aid decision making
All limited companies need one by law
Key terms of income statement
Sales revenue
Cost of sales
Gross profit
Expenses
Profit for the Year
How to calculate ppty?
Gross profit - expenses
Benefits of using ratios
Allows comparison between previous years and competitors
Aids decision making
Highlights trends over period of time
Limitations of using ratios
Based on historical financial information
Only useful if compared against a like for like organisation
Who uses financial information?
Lenders (repay assets)
Employees (job security/pay rise)
Government (amount of tax paid)
Shareholders (return on investment)
Supplier (repay goods supplied)
How do u use word in finance?
Create letter to send to costumers who have accounts due to be paid
How is powerpoint used in finance?
Create presentations to summarise financial information to show to shareholders at meetings
