REVISION Flashcards
consumer products
are goods ad services bought by “final” customers who will benefit from them and not use them in production of another product
Capital and intermediates goods
are goods and services bought by industries to be used in production of another product
added value
the difference between cost for purchasing raw materials and selling price of finished goods
entrepreneur
someone who takes financial risk of startin and managing a new business venture.
Social enterprises
businesses with mainly social objectives that reinvest profit on benefiting society rather than maximising return to the owners
primary sector
business involved in farming, fishing, extracting naturl resources
secondary sector
business involved in manufacturing products from primary goods
tertiary sector
business involved in providing services to customers and other businesses.
public sector
comprises organisations owned, accountable to and controlled by the state
private sector
comprises businesses owned and controlled by individuals or group of people
multinational company
business with headquaters in one country by with operating branches or factories in another country
privatisation
selling state owned organisation to investors in the private sector
Internal growth
expansion of business by opening new shops, branches, factories- also known as organic growth.
external growth
expansion of business achieved by intergration - merging with or taking over another business. this can be from either the same or different industry
Startup capital
capital needs by an entrepreneur to set up a new business
Revenue expenditure
spending on all cost and assets other than fixed assets. It includes wages, salaries, raw material bought for stocks
Capital expenditure
involved the purchase of assets that expected to use to last for more than one year such as building and machinery
Working capital
the capital needed for raw materials, day-to-day running cost and credit offered to customers.
Working capital= current assets - current liabilities
liquidity
the ability of a firm to be able to pay for short term debt
liquidation
when firm ceases trading and its assets are sold for cash to pay suppliers and other creditors
overdraft
banks agrees to businesses borrowing up to an agreed limit as when required
factoring
selling of the claims over debtors to a debt factor in exchange for cash ( intermediate liquidity) _ only a proportion of the value of the debts will be received in cash, the rest is commision to the factor
long term loans
loans that do not have to be repaid for at least one year
equity finance
permanent financed raised by companies through the sale of shares
Long term bonds/debentures
bonds issues by company to raise debt finance, often at a fixed rate of interest
right issue
the right of existing shareholers to buy addition shares at a discounted price
