Paper 1 - Putting the Business Idea Into Practice Flashcards
MARKET SHARE
The percentage of a market held by one company
SMART OBJECTIVES
Targets that are specific, measurable, achievable, realistic and time bonded
FIXED COSTS
Costs that don’t vary just because output varies. E.g. rent
INTEREST
The charges made by the banks for the cash they have lent to a business.
PROFIT
The difference between the revenue and total costs. If it is a negative then it is making a loss.
REVENUE
The total value of the sales made within a set period of time such as a month.
TOTAL COSTS
All the costs over a set period of time.
VARIABLE COSTS
Costs that vary as output varies, such as raw materials.
FORMULAE FOR
SALES REVENUE =
Price x quantity sold
FORMULAE FOR
TOTAL COSTS =
Variable costs + fixed costs
FORMULAE FOR
PROFIT=
Total revenue - total costs
BREAK EVEN
The level of sales at which total costs are equal to total revenue. At this point the business is making neither a profit or loss.
BREAK EVEN CHART
This is a graph showing a company’s revenue and total costs at all possible levels of output.
MARGIN OF SAFETY
The amount by which demand can fail before the business starts making losses.
Margin of safety = Sales - break even output
CASH
The money the firm holds in notes and coins and in its bank account.
CASH FLOW
The movement of money into and out from the firms bank accounts.
INSOLVENCY
When the firm lacks the cash to pay its debts.
OVERDRAFT
The amount of the agreed overdraft facility that the business uses.
CLOSING BALANCE
The amount of cash left for n the bank at the end of the month
NEGATIVE CASH FLOW
When cash outflows are greater than cash inflows.
NET CASH FLOW
Cash in minus cash out over a month
OPENING BALANCE
The amount of cash in the bank at the start of the month
CROWDFUNDING
Raising capital online through many small investors but not through the stock market.
DIVIDENDS
Payments made to each shareholder from the company’s profits.the directors of the company decide how large or small the dividend should be depending how well the company has done.
SHARE CAPITAL
Raising capital by selling part ownership of the business.
