Financial Management Flashcards
Revenue budget
estimated sales; projected during the budget process
Operational budget
guides day-to-day ops; foundation of planning and control; include revenue and costs
Capital budget
foundation for growth, repairs
Cash flow budget
estimated flow of cash in and out during a given time period
Master budget
operational, capital, revenue, cash flow budgets; estimated profit provided as well
Incremental budget
based on previous year’s budget adjusted for inflation
Performance budget
preference is given to those projections for generations of sales
Zero-based budget
made each year; funds allocated by justification to continue activities or beginning new activities
Revenue
money received for the sale of a good
Direct costs/expense
costs associated with a specific department, product, service
Indirect costs/expense
costs that CANNOT be associated with a specific department, product, service
Capital expenditures
Major purchases/replacements, improvements, expansions
Profit margin
revenue less all costs of a specified good or service
Profit margin on sales = net income/sales
ROI
The amount received in excess of the original investment. Usually expressed as a % on an annual/yearly basis. Possible to have a negative ROI. May be expressed as interest, gain/loss, net income/loss. The original amount invested may also be referred to as an asset, investment, capital, or principal.
Financial Statements
aid to determine financial condition and profitability
Balance sheet
statement of assists, liabilities, and equity
Income statement
revenue and income less expenses for the period arriving at net income or loss
Cost benefit studies
evaluate whether different options would return better results financially or operationally
Cost effectiveness
cost vs. results. Desired outcome often not measured in dollars. Assists in determining a specific predetermined goal. Popular in public programs.
Cost benefit analysis
effort, time, expense vs. benefits. Performance measured in monetary terms.
Productivity studies
evaluated quantitatively; based on input vs output
Net income
Revenue - Expenses
Revenue
Amounts received from customers for goods or services rendered.
Total revenue
Price x quantity sold
