finance

Question 1

who does finance in a business

Answer 1

a small business may hire a accounant a large business would have a department

Question 2

financial infomation

Answer 2

data of average profitabilty profit and loss costs of revenue and cash flow forecast

Question 3

accurate info

Answer 3

it must be accurate so the decisions will be effective for the business

Question 4

business planning

Answer 4

helps for start up, expansion the inabiltiy to get finances will restrict business activity types of ownership

Question 5

source of finance

Answer 5

where it gets it money

Question 6

revenue

Answer 6

sales

Question 7

break even

Answer 7

number of products needed to be sold to cover costs

Question 8

cash flow

Answer 8

a record of money coming in and going out of a business

Question 9

when will financial information be important

Answer 9

when a company wants to be eco-friendly - more cost selling abroad or online addition money fr production process

Question 10

examples of finances

Answer 10

expansion recruitment new business developing marketing activities

Question 11

long term or short term

Answer 11

both

Question 12

loan

Answer 12

long term /medium money borrowed from bank or lender. if not paid an asset can be taken to pay of loan interest must be paid and business could risk losing and asset but they know how much to pay

Question 13

share issue

Answer 13

shares are sold which raises more money. investors are given dividend and can fund expansion new and established businesses long term no interest shareholders have a say. can be taken over

Question 14

crowdfunding

Answer 14

medium long term money raised by sponsors they can donate lend and become part-owner. usually for start up and expansion interest may be paid, profits may need to be shared if equities sold no security needed for loans

Question 15

retained profit

Answer 15

money that is not distributed but invested in business long medium term# no interest no repaying no cost to raise finance only avaliable if business has this profit

Question 16

sales of assets

Answer 16

fixed asset e.g machine is sold, typically for replacment and expansion. established business short, medium long term good if asset is useless take time to sell advertising to sell it more cost more to advertise it

Question 17

overdraft

Answer 17

short term all businesses arranging with the bank to spend more than there is used for day to day expenses e.g wages can continue trading short term cash flow problems solved high interest

Question 18

trade credit

Answer 18

does not need to pay the suppliers straightaway 30-90 days all businesses interest free during the trade credit period they can sell to customer then use money to pay back the supplier interest is paid after the time limit items still need to be paid for

Question 19

new partner

Answer 19

expansion, replacement capital expansion contributes to finance long term established business new skill no costs share profit has a say in the running on the business

Question 20

owners capital

Answer 20

all businesses use their own savings for expansion, and start up all terms they may not have enough savings no interest no costs no repayment

Question 21

net margin

Answer 21

net profit/ sell revenue *100

Question 22

how to reduce fixed costs

Answer 22

lower cost location reduncies , automations, reduced hours cheap insurance store closures

Question 23

how to reduce variable costs

Answer 23

cheaper materials buying in discount

Question 24

gross profits

Answer 24

profit made as a result of buying and selling goods and services, but without paying for expenses

Question 25

gross profits equation

Answer 25

gross profit = revenue - cost of sales 2 choc - 1 choc = 1 choc

Question 26

net profit

Answer 26

profit of sales minus the expenses

Question 27

net profits equation

Answer 27

net profit/ sales revenue * 100

Question 28

large increase of profit

Answer 28

purchase of equipment and building takeover increased dividenend higher income for owner more development in service and goods

Question 29

falling of profit

Answer 29

postphone purchase of new equipment taken over by another business reduced dividend and income less development in service and goods

Question 30

break even

Answer 30

a business will breakeven if it sells enough products that total sales equal total costs. no lost

Question 31

break even equation

Answer 31

fixed cost / selling price - variable cost per unit

Question 32

use of break even

Answer 32

to get loans from bank how much you will need to sell to make a profit making judgement on prices and costs see impact of changing costs

Question 33

limitation of break even

Answer 33

forecast can be different from reality variable cost could reduce assumes that the fixed cost do not change one product assumes all products are sold

Question 34

draw the break even graph

Answer 34