finance Flashcards
remember basics of business finance
What are the main sources of finance for businesses?
Internal sources (retained profit, sale of assets) and external sources (bank loans, overdrafts, venture capital, shares, crowdfunding).
What is a cash flow forecast?
A financial statement that estimates the flow of cash in and out of a business over a specific period.
What is the break-even point?
The level of sales at which total revenues equal total costs, resulting in neither profit nor loss.
What does a profit and loss account show?
A financial statement showing a company’s revenues and expenses over a period, resulting in profit or loss.
What does a balance sheet display?
A financial statement showing a company’s assets, liabilities, and equity at a specific point in time.
How is gross profit calculated?
Sales revenue minus the cost of goods sold.
What are financial ratios used for?
Analysing a company’s financial performance, such as liquidity, profitability, and solvency ratios.
How is net profit calculated?
Gross profit minus operating expenses, interest, and taxes.
What is the purpose of budgeting?
Planning and controlling financial resources by forecasting income and expenditures.
