Managing Finance Flashcards
What is cash?
The money a business needs to keep to operate the business on a daily basis.
Why is cash flow not the same thing as revenue?
Revenue is the amount of money a business brings in before costs are considered. Revenue comes from customers and cash flow is from any source.
What is profit?
The money left over after costs have been payed.
What is overtrading?
When a business depletes its financial resource in the process of expanding, unable to pay suppliers as a result.
What is an income statement?
Financial documents that calculate the profit/loss made by a business. Usually produced every 12 months.
What is cost of sales?
The cost involved in directly producing the goods or services you sell.
What are overheads?
All the expenses a company incurs that don’t contribute to production.
What is operating profit?
Money left after paying all business costs but before paying tax.
What are finance expresses?
Costs incurred from borrowing from lenders or creators.
What is net (retained profit)?
Amount of the businesses income that is kept within its accounts rather than paid out to shareholders.
What is opening stock?
The stock left over from last year.
What is the calculation for cost of sales?
(Opening stock+purchases)-closing stock
Why are income statements important?
-compare performance from last year
-understand how profit/loss arose
-for investors or bank loans
What is the calculation for gross profit?
Gross profit/revenue x 100
What is the calculation for operating profit margin?
Operating profit/sales revenue x 100
What is the calculation for net profit margin formula?
Net profit/total revenue x 100
