Finance Flashcards
Adverse Variance
A difference between actual and budgeted amounts which is bad e.g higher than budgeted costs
Bank overdraft
Borrowings from a bank on a current account which are payable on demand
Break even
The point at which the total sales of a business equal total costs - the business is making neither a profit nor a loss
Budget
A detailed plan of income and expenses expected over a certain period of time
Cash flow
The movements of cash into (inflows) and out of (outflows) a business
Cash flow forecast
A prediction, usually by week or month, of the likely cash inflows and outflows in a business
Contribution
The difference between total sales and total variable costs
Dividend
A payment that is made by a company to its shareholders from the profit earned
Exchange rates
The rate at which one currency can be converted into another currency
Favourable variance
A difference between actual and budgeted results which is good e.g higher than budgeted revenue
Fixed costs
Costs that do not vary with the level of output
Gross profit
Revenue minus cost of sales
Interest rates
The cost of borrowing money or the return for investing money
Liquidity
The ability of a business to pay its debts
Margin of saftey
The difference between the actual level of output and the break even output
Operating profit
Gross profit minus admin costs
Profitability
The ability of a business to generate profits from its activities
Sales forecasting
The process of estimating future sales
Total costs
The total variable and fixed costs in a business
Unit cost
The average production cost per unit
Variable costs
Costs that vary directly in proportion to output
Variance
The difference between the budgeted amount and what actually happens. A variance can be positive (favourable) or negative (adverse)
Venture capital
Investment made by specialist funds to finance the launch, early development or expansion of a private company
Working capital
The amount of money that a business has available
