financial performance Flashcards
UNIT 5
define cashflow
the timing of payments and receipts, important on the short term to keep a business afloat
what is profit
revenue greater than its expenditure
what are income statements
a record of a businesses sales rev and costs over a trading period as well as recording profits and losses
calculate gross profit:
rev - cost of goods sold/direct costs/cost of sales
cost of good sold =
direct costs or cost of sales or variable costs
calculate operating profit:
gross profit - indirect costs
calculate profit for the year:
operating profit - interest
what are revenue objectives
when aiming for growth, also often specific to an aspect of the business
what are cost objectives
reducing costs in aims to increase profits
OR
cost minimisation to keep prices low
what are profit objectives
an objective for the entire business
expressed as:
a simple figure
a % increase
% comparison to sales
define capital expenditure
spending to purchase non-current assets
internal influences on financial objectives
nature of product sold
overall strategy
objectives of senior managers
external influences on financial objectives
P TLE - C
name the 3 types of budgets
revenue/earnings
expenditure
profit
another name for revenue budgets
earnings budgets
what are budgets for
to organise planned profits or losses
difficulties in constructing budgets
unexpected changes unaccounted for
difficult to forecast due to poor market data
decisions made by governments/ financial institutions
