Finance Flashcards
What is revenue
The income into a business
Formula for revenue
Sales * selling price
What are direct costs
Costs Thant link directly to making a product such as raw materials and labour
What are indirect costs
Overheads of running the business such as management salary and electric bills
What are fixed costs
Costs that don’t change with output, usually indirect costs, office rent will still need paying if nothing is produced
What are variable costs
Costs that change based on output such as raw materials
What is working capital
The working cost
What is trade credit
Product is given to customer and customer doesn’t have to pay for up to two months
What is venture capital
Money invested by induviduals who help the business start up and in turn acquire a percentage share of the business
Why does the government like new businesses
If they are successful they will pay taxes. They reduce unemployment so reduçe benefit expenses
How does the government help small businesses
Give them grants
Underwritten loans. If they can’t pay back bank, government will
They have organisations that help businesses such as training and advice
How do banks help small businesses
Give them money and overdrafts and advice on how to pay bills and how to be successful
Why do banks help small businesses
They want businesses to open an account with them rather than competitors. They help the business so the business can pay back its debt
What is net cash-flow
The difference between cash inflow and outflow over a period of time
What are cash-flow forecasts for
Predicting when there may be a cash problem so the business can take the appropriate action to prepare for it and maybe try and resolve it before it starts
