Finance Flashcards
what kind of business have a separate financial function
large businesses
what do financial functions do
provide financial information
- costs, revenue and cash-flow forecasting
- profit and loss
- data on average rate of return
support business planning and decision making
- business expansion plans
- ability to replace assets
- drawings, sales of shares and dividend payments
Captial
money for investment
source of finance
A source, either within or outside of a business, from which a business can get access to money
revenue
incoming money
Costs
money that leaves a business
break even
when revenue is equal to costs
profit
total revenue minus total cost
cash-flow
the total amount of money being transferred into and out of a business
Drawings
The money taken from the business by the owner(s) for personal use.
dividends
earnings distributed to shareholders
Share issue
selling of new shares
sources of finance examples
owners capital
friends and family
retained profit
sale of assets
overdraft
trade credit
taking on new partner
loans
share issue
crowd funding
revenue equation
selling Price x Quantity sold
Total Cost Equation
fixed cost + variable cost
fixed costs
Costs that do not vary with the quantity of output produced
fixed costs examples
salaries, mortgage, rent, business rates and advertising
variable costs
costs that vary with the quantity of output produced
variable costs examples
delivery, packaging, heating, component, wages
Profit Equation
Total revenue - total cost
gross profit
the excess of net sales over the cost of goods sold
net profit
The amount left after operating expenses are subtracted from the gross profit
gross profit equation
Revenue - cost of sales
net profit equation
Gross Profit - Expenses
