Finance Flashcards
What is finance?
The money needed to start up and run a business
Why is there need for finance?
So people can start up their own business and keep it running
What are the difficulties in raising finance?
Lack of credit scoring
Uncertainty
Entangled position
Interest rate discrimination
What is a cost?
Expenses that a business will pay
Money that goes out
What is fixed cost
Business costs, such as rent, that are constant whatever the amount of goods being produced.
What is variable cost?
A cost that varies with the level of output
What are start up costs?
Startup costs are the expenses incurred during the process of creating a new business .
What are running costs?
Running cost of a business is the amount of money that is regularly spent on thing such as salaries.
How do you calculate total costs?
TOTAL COSTS = FIXED COSTS + VARIABLE COST
What is revenue?
All the money generated by a business
All the money that comes in
How do you calculate revenue?
REVENUE = SELLING PRICE PER UNIT X UNITS
What is profit?
Overall, income after all expenses have been paid.
The money left over after expenses
How is profit calculated?
PROFIT = TOTAL REVENUE - TOTAL COSTS
What is price?
The amount of money expected, required, or given in payment for something
Why are revenue and profit important?
They’re important because they determine how well you’re doing and allows you to see where there are problems
