Glossary Unit 1 Flashcards
Cash flow
The money that flows into and out of a business over a given time period.
Cash flow needs to be sufficient as cash is needed to pay bills.
Demographic
the size and structure of the population including features like age profile gender and ethnic makeup.
Dividends
a portion of the profits of the firm given to shareholders.
Ethical
morally correct behaviour e.g. treating workers and the environment well
Fair trade
Buying raw materials at a price that allows a reasonable standard of living for the suppliers and often above at the market price.
Company growth
the increase over time of the revenue of a business. Economic growth refers to the increase in size of the whole economy i.e. the sales of all the businesses in a nation.
Interest rate
is the cost of borrowing money and return for lending money. Borrowers have to pay back the original amount PLUS a charge for borrowing the money. A high interest rate may be a burden for businesses that are highly geared and may encourage consumers to save instead of spend.
Limited liability
Shareholders can only lose the money invested in the company not their entire personal wealth if the business collapses with debts. Limited liability is shown by either Ltd or plc
Market capitalisation
the value of a company as measures by the stock market.
Market Capitalisation = Number of shares x share price
Market conditions
How confident and well-off customers are feeling and the number and strength of competitors. Both consumers and rivals affect sales.
Mission
The main purpose of the organisation
Mutuals
An organisation whose members who collectively own the business and are
also its customers. There are no shareholders E.g. Building Societies
Non-profit organisation
An incorporated organization which exists for the interests of its members or as a charity, so there are no shareholders only trustees benefit financially. E.G. Kimbolton School
Objective
Short–term specific measurable target. E.g. 1m sales next month
Ordinary share capital
the amount of money invested into the business by the shareholders. The shareholders cannot reclaim their money from the firm, but can sell their shares to another party.
Private Limited Company
A limited liability business where shares are not freely available for sale, decisions can be made by the owners. They are usually small or medium sized firms but there are exceptions e.g. Virgin.
Private Sector
Any organisation that is not government run or owned.
Profit
is the difference between a firm’s revenues from its trading activities and its total costs. It is a reward for risk and a return on capital invested.
PROFIT = TOTAL REVENUE – TOTAL COST
Public sector organisation
Government owned organisation
Public Limited Companies
Large firm whose shares can be bought and sold
by the general public on the Stock Exchange. The owners appoint managers to run the business.
Revenue
the income generated by sales of a product. Also known as sales revenue or sales value
Revenue Equation
Price x Quantity
Share
A certificate indicating part ownership of a company. The share entitles the
holder to receive dividends and voting rights to affect the way the firm is run.
Shareholder
Part-owners of a business who can vote at the AGM and receive dividends.
Social goal
an aim of benefiting the community, environment or some external stakeholder. Social goals are considered ethical and may involve a sacrifice of profit.
Sole trader
An individual who owns and runs a business. S/he operates under unlimited liability so are personally responsible for all business debts.
Importance of profit for businesses
Access to finance from banks, Attract investors, Fund Growth, Keep up with competition
Influences on share price
Company reputation & performance. Industry performance, economic factors
