Financial information and decision making

Question 1

What are owners’ funds?

Answer 1

The money that the owners already have

Question 2

Define venture capitalists

Answer 2

Private investors willing to risk money on new businesses

Question 3

What is retained profit?

Answer 3

Profit kept by the business to help finance grow and is not distributed to owners

Question 4

Define overdraft

Answer 4

Bank permission to withdraw more from an account than is deposited

Question 5

Define internal sources of finance

Answer 5

Finance that comes from within the business

Question 6

Define external sources of finance

Answer 6

Finance that comes from outside the business

Question 7

Define asset

Answer 7

Something that a business owns

Question 8

What is floating a company?

Answer 8

Offering shares in the company to the public, via the stock exchange

Question 9

Define cash-flow

Answer 9

Money flowing into and out of a business

Question 10

Define cash-flow statement

Answer 10

Flows that took place in the past

Question 11

Define cash-flow forecast

Answer 11

A prediction of future flows

Question 12

Define cash-flow crisis

Answer 12

When there is insufficient cash to pay immediate bills

Question 13

How do you calculate gross-profit?

Answer 13

Total revenue minus cost of sales

Question 14

How do you calculate net-profit (also called operating profit)?

Answer 14

Gross profit minus expenses

Question 15

What are expenses (also called overheads or operating costs)?

Answer 15

The day-to-day running costs of the business

Question 16

Define social enterprise

Answer 16

An organisation set up to help groups or communities, rather than for profit

Question 17

What is profit?

Answer 17

The excess of revenue over costs

Question 18

What is a profit-margin?

Answer 18

The additional sum added to cost to provide profit