Sem 1 Week 3a Flashcards
Financial Plan
What are variable cost examples?
-A fraction more coffee
-A little more hot water
-A little more packaging
What are examples of fixed costs?
-Wages
-Rent
-Equipment
-Utilities
How can the total cost be calculated?
Its the fixed cost + the variable cost
What is a profit and loss (P&L) Statement?
A financial statement summarizing revenues, costs, and expenses incurred during a specified period (e.g a fiscal quarter or year)
What does a profit and loss statement identify?
Whether the product is profit/loss making and the improvement areas
What is revenue?
Total income from the sale of goods or service related to the company’s primary operations.
-Does not deduct any costs or expenses associated with operating the business.
What is profit?
Amount of income remaining after deducting all expenses, debts, additional income streams, and operating costs
What is fixed income?
refers to any type of investment under which the borrower/issuer is obligated to make payments of a fixed amount on a fixed schedule.
What are fixed costs?
These are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time related, such as salaries orrents being paid per month, and are often referred to as overhead costs. This is in contrast to variable costs, which are volume-related.
What is innovation finance?
The management of money, banking, investments, and credit to facilitate the successful exploitation of the new ideas is critical when investing in new ideas.
How do you calculate the future value of money?
the present value times (1 + rate of interest) ^ number of years.
How do you calculate the net present value?
net cash flow / (1 + discount rate) ^ number of years.
What is discounting?
Converting future cash to a value at the present time
What is compounding?
Opposite of discounting . Identifies what the money you have now will be worth at a future time.
What is the risk free rate?
The interest rate an investor can expect to earn on an investment that carries zero risk. This is where the amount to be repaid is depandent on the time period for which it is invested. Therefore, the risk free rate is synonymous with the time value of money.
