Key Words and Definitions Flashcards
Aim
A general goal of a business
Objective
A specific target that is set for a business to achieve
Stakeholder
Individuals and organisations that are affected by , and affect the activities of a business
Shareholder
A person or an organisation that owns part of a company. Each shareholder owns a ‘share of the business’
Company
A business that has its own legal identities
Revenue
The total income that a firm receives
Asset
Items of value owned by the business,(either in cash form or which can be turned to cash)
Costs
Costs are the expenses paid out to run the business
Profit
A business makes a profit if they earn more than they spend
Entrepreneur
Someone who is willing to take risks involved in starting a new business
Consumer
Someone who uses goods and services produced by businesses
Break Even
Revenue and costs are equal, so the business is not making loss or profit
Cash Flow
Money flowing in and out of the business
Forecasting
Predicting future outcomes
Short-term sources of finance
Sources of finance paid back to lender a short period of time
Long-term Sources of finance
Sources of finance being borrowed for a longer period of time
Interest rates
The cost of borrowing money or the reward for saving money, expressed as a percentage
Dividends
The financial rewards paid out to shareholders each year.
Trade credit
Arranging to delay or reschedule payments at a later date
Overdrafts
These let firms take out more money out of its bank than it has paid into it
Loans
Source of finance borrowed from bank and repaid with added interest
Personal Savings
A business owners personal money invested into the business
Share capital
When individuals buy shares in a business making them a shareholder
Venture Capital
Source of finance raised through investors – taking a risk on entrepreneurial talent
Retained profit
A portion of the companies profits that are kept in the business rather than paying it out to shareholder
Crowd Funding
When a large number of people contribute money towards funding a business idea
Limited Liability
The owners of the business can only loose the amount of money they put into the business
Unlimited Liability
Owner can lose money they invested and their personal assets. One legal entity.
Franchise
When a franchisor sells the “rights” to its products to a franchisee
Franchisee
Buys a franchise and usually pays a fee or percentage of turnover.
