Finance

Question 1

Finance function

Answer 1

Finance function is the department

Question 2

Sole trader finance function

Answer 2

Maybe an accountant

Question 3

Larger company’s finance function

Answer 3

Ltd or pod may have there own personal finance function

Question 4

Finance department will look at

Answer 4

Costs and the revenues
Cash flow
Profit and loss
Rate of return how much money you will get back for every pound

Question 5

What they will do in the finance function

Answer 5

Expansion
Stock
Branches

Question 6

Influence of a finance

Answer 6

So the company can know how much money they have to spend

Question 7

Where you can get money from

Answer 7

Shares
Savings
Loads
Over draft

Question 8

Reasons for needing finance

Answer 8

Start of your business 
Replace equipment 
Expand cash flow 
Research and development 
Marketing campanes 
Recruitment

Question 9

Types of finance function

Answer 9

Cash flow forecast
Budgeting
Costs and revenues
Profit and loss

Question 10

Rate of return

Answer 10

The money you put in and the money you get out

Question 11

Key terms

Answer 11

Revenue - money businesses receive from selling goods

Question 12

What would you do if the country was in Resection

Answer 12

Prices may be dropped

Question 13

Short term finance (1 year)

Answer 13

Owners capital (dont have to pay it back so there is no interests)
Sale of assets (car machinery property)
Overdraft (day to day expenses)
Trade credit (delayed payment for goods for an agreed amount of time)

Question 14

Why short term finance

Answer 14

Develop business or expand

Liquidate the business

Question 15

Medium term finance (1-5 years)

Answer 15

Retain profit (reinvesting back into the business)
Loans
Crowd funding (donations from public sponsors)
Shares (shares of equities could be sold)

Question 16

Long term (5 years + more)

Answer 16

Bank loans
Selling shares
New partner
Crowd funding

Question 17

Security

Answer 17

Something you offer to the bank in case you can’t pay

Question 18

Revenue

Answer 18

Income that is coming into the business

= quantity sold times by

Question 19

Costs

Answer 19

Payments the business makes to make the product or provide a service
Includes variable and fixed costs

Question 20

Variable costs

Answer 20

A variable cost is a corporate expense that changes in proportion to production output.

Question 21

Fixed costs

Answer 21

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Question 22

Loss

Answer 22

When your costs are mor than revenue

Question 23

Profit

Answer 23

Gross profit = revenue- costs of sales

Net profit = gross profit - running cost

Question 24

Profitability

Answer 24

Cash flow

Question 25

Profitability ratios

Answer 25

Are used to measure performance of the business
Have your costs increased
Have your profits increased

Gross profit margin is calculated with formula gross profit divided revenue times 100
Net profit margin is calculated with formula net profit divided by revenue times 100

Question 26

Making decisions on revenue

Answer 26

External environment actions are competitors

Pricing of competitors and cost

Question 27

Change revenue

Answer 27

Increase in sales 
increase price changes 
 range of products  
Product development 
Diversification

Question 28

Decision about profit and loss

Answer 28

Reinvestment in equipment
Reinvestment in expanding the business
How much dividends to pay

Question 29

If your making a los you need to make decisions about

Answer 29

about weather you need to increase your prices or yo reduce your costs