Finance Flashcards

1
Q

Name another source of finance

A

Selling assets- no interest payments

However - might have sold am asset which is needed for later use

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2
Q

Name adv and disadvantage of a bank loan

A

Adv- arranged quickly, and a repayment is over a long period of time

Dis- interest and a colletaral

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3
Q

What is a profit and loss account

A

The revenue subtracting the costs

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4
Q

How do you work out gross profit

A

Revenue - cost of sales

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5
Q

How do you work out the net profit

A

Goes profit - overheads

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6
Q

What is revenue

A

Income made from selling goods or services

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7
Q

What is cost of sales

A

Costs which are directly involved providing the products such as materials and wages and electricity costs

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8
Q

What is overheads

A

Costs remain constant also called expenses

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9
Q

What is a balance sheet

A

The assets and liabilities of a business

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10
Q

Give an example of a fixed asset

A

Buildings

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11
Q

Give an example of a current asset

A

Stock

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12
Q

What is current liabilities

A

Bills which the firm has to pay soon

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13
Q

How do you work out the net current assets

A

Current assets- current liabilities

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14
Q

How do you work out gross profit margin

A

Gross profit / sales revenue x 100 (%)

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15
Q

How do you work out net profit margin

A

Net profit / sales revenue x 100(%)

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16
Q

How do you work out net current assets

A

Fixed assets +. Current assets - current liabilities - long term liabilities

17
Q

What is a liquidity ratio

A

Amount of cash a business has

18
Q

How do you work out the current ratio

A

Current assets / current liabilities

19
Q

How do you work out acid test ratio

A

Current assets - stock / current liabilities

20
Q

What happens if the acid test is too high ( above 1)

A

Means there’s too much cash lying about and would be more profitable to invest this money

21
Q

What happens if the acid test is much below 1?

A

It means it’s worrying and needs to do something about its costs and liabilities

22
Q

Name one source of finance

A

Retained profits: don’t have to pay interest and are arranged immediately

However - are only available in profitable businesses.