section 5 Flashcards
Capital Employed
it’s shareholder’s equity plus non-current liabilities and is the total long-term and permanent capital invested in a business
Illiquid
means that assets are not easily convertible into cash
Liquidity
the ability of a business to pay back its short term debts
Current Liabilities
short term debts owed by the business
Non-Current Liabilities
long term debts owed by the business
Current Assets
owned by a business and used within one year
Non-Current Assets
items owned by the business for more than one year
Liabilities
the debts owed by the business
Assets
items of value which are owned by the business. They may be fixed (non-current) or short-term current assets
Balance Sheet
shows the value of a business’s assets and liabilities at a particular time
Retained Profit
the net profit reinvested back into a company, after deducting tax and payments to owners, such as dividents
Depreciation
the fall in the value of a fixed asset over time
Net Profit
the profit made by a business after all costs have been deducted from the sales revenue. It is calculated by subtracting overhead costs from gross profits
Trading Account
it shows how the gross profit of a business is calculated
Sales Revenue
the income to a business during a period of time from the sale or goods or services
Gross Profit
it’s made when sales revenue if greater than the cost of goods sold
Income Statement
a document that records the income of a business and all costs incurred to earn that income over a period of time (for example one year). It is also know as a profit and loss account
Cash Flow Forecast
an estimate of future cash inflows and outflows of a business, usually on a month by month basis. This then shows the expected cash balance at the end of each month
Cash Flow Cycle
shows the stages between paying out cash for labour, materials, etc. and receiving cash from the sale of goods
Cash Outflows
the sums of money paid out by a business during a period of time
Cash Inflows
the sums of money received by a business during a period of time
Cash Flow
the cash inflows and outflows over a period of time
Micro-Finance
providing financial services - including small loans - to poor people not served by traditional banks
Revenue Expenditure
money spent on day to day expenses which do not involve the purchase of a long-term asset, for example wages or rent
Capital Expenditure
money spent on fixed assets which will last for more than one year
Working Capital
the finance needed by a business to pay its day to day costs
Start-Up Capital
the finance needed by a new business to pay for essential fixed and current assets before it can begin trading
