finance Flashcards
4 functions of money
unit of account, means of exchange, store of value, legal tender
6 factors of that influence our view on money
personal attitude, life stages, culture, life events, external influences, interest rates,
ways of planning expenditure
avoid getting into debt, control costs, repossession,avoid bankrupcy , manage money to fund purchases, generate income and savings, set financial targets and goals.
ways of paying for products
cash. credit card, debit card, cheque, pre paid cards, contactless cards, charge cards
types of current accounts
standard, packaged, student, basic
6 ways of saving
individual savings account, deposit and savings account, premium bonds, bonds and gilts, shares pensions
6 types of insurance
car, home, life, travel, pet, health
6 types of borrowing
overdraft, personal loans, hire purchase, mortgages, credit cards, payday loans
types of financial institution
bank of England, bank, building societies, credit unions, national savings and investment, pawnbrokers, payday loans, insurance companies, pension companies.
methods of interacting customers
branch, online banking, telephone banking, mobile banking, postal banking.
laws that protect the right of the customers
financial conduct authority, financial ombudsman service, financial service compensation scheme, consumer credit
organisations that provide financial service
citizens advice, independent financial advisor, money advice service, debt counsellors,
5 purposes of accounting
recording transactions, management of business, compliance, measuring performance, control
capital income
loan, mortgage, owners capital, shares, debentures
revenue income
cash sales, credit sales, rent received, discount received, interest received, commission received.
what you spend your revenue on
rent, rates, bills, water, insurance, postage, salaries,wages, marketing, stock.
3 internal sources
retained profit, net current assets, sale of assets.
capital expenditure
land, building, machinery, vehicle, goodwill, patents, trademarks, brand names.
net cash flow
inflow- outflow
closing balance
net cashflow + opening balance
variable costs
quantity cost x cost of one unit
total costs
fixed costs + variable costs
total revenue
How much sold x selling price
break even-point
fixed cost/contribution per unit
contribution per unit
selling price- variable cost
margin of safety
actual sales - break even point
profit/loss
total revenue - total costs
gross profit =
sales - cost of sales
net profit
gross profit - expenses
cost of good sold
opening inventory + purchases - closing inventory
net current assets
current assets - current liabilities
trade receivables
trade receivables/credit sales x 365
trade payables
trade payables/ credit purchases x 365
stock turnover
opening stock - closing stock/2 / cost of sales x 365
what is financial ratio
shows financial health
what is statement of comprehensive income
shows profit for the all year
what is statement of financial position
what the company owns and owes at the specific time
gross profit margin =
gross profit/sales x 100
gross profit margin
how good the company is at making money
mark up =
gross profit/ cost of sales x 100
mark up
profits as percentage of sales
net profit margin =
net profit/sales x 100
return on capital employed =
net profit before interest/capital employed x 100
current ratio =
current assets/current liabilities
liquid capital ratio =
current assets - inventory/current liabilities
