finance Flashcards
variable costs
those that change in line with the amount of business e.g. cost of buying raw materials
working capital
the finance available for the day-to-day running of the business
Angel investors
investors who back a business before it has opened its doors, taking a full equity risk
collateral
an asset used as security for a loan
crowdfunding
obtaining external finance from many individual, small investments
public limited company plc
company with limited liability and shares which are available to the public
seedcorn capital
the early stage finance that might come from an angel investor
share capital
business finance that has no guarantee of repayment or of annual income, gains share of control and potential profits
stock market
market for buying/selling company shares
venture capital
high-risk capital invested in a combination of loans and shares
bankrupt
individual is unable to meet personal liabilities
creditors
those owed money by a business
limited liability
owners are not liable for the debts of the business, lose no more than what they invested
sole trader
a one person business with unlimited liability
unlimited liability
owners liable for any debts incurred by the business
cash flow forecast
estimating future monthly cash inflows and outflows to find out the net cash flow
just-in-time
ordering stock so that it arrives just before it is needed
overdraft
short-term borrows from a bank, only borrows what it
needs
contingency plans
plans held in reserve in case things go wrong
real incomes
changes in household incomes after allowing for changes in prices
sales forecast
a method of predicting future sales using statistical methods
trend
the general path that a series of values follows over time, disregarding variations or random fluctuations
piece rate labour
paying workers per item they make
sales volume
the number of units sold in a time period
contribution
total revenue less variable costs. calculation of contribution is useful for businesses that are responsible for a range of products
margin of safety
amount by which current output exceeds the level of output necessary to break even
adverse variance
difference between budgeted and actual figures that is damaging to the firms profit
criteria
yardsticks against which success can be measured
expenditure budget
setting a maximum figure on what a deportment or manager can spend over a period of time
favourable variance
difference between budgeted and actual figures that boosts a firms profit
income budget
setting a minimum figure for the revenue to be generated by a product, department or manager
zero budgeting
setting all future budgets at £0 to force managers to justify spending levels
corporation tax
a levy on the incomes of companies
dividends
Annual payments made to shareholders
fixed overheads
indirect costs that have to be paid however let the business is performing
contingency finance
planning for the unexpected
credit period
length of time a supplier allows a buyer to wait before paying
liquidation
closing the business down by selling off the assets
liquidity
ability of a business to pays its bills on time depends on amount of cash in bank
working capital cycle
time it takes for complete cycle from cash out to cash back from customer payment
fixed costs
those that do not change as the number of sales change e.g. rent/salaries
