setting financial objectives Flashcards
what’s revenue?
the amount of income a firm receives from producing and selling a specific number of goods
what are costs?
the costs of producing a specific number of goods
profit is…
a profit is made when a firms revenue is greater than its total costs
define gross profit
the difference between a firms revenue and the cost of making or buying the products sold i.e. cost of sales
what is net/operating profit?
the profit left after all the operating costs incurred in the normal trading activities of the business are deducted from revenue
what is profit for the year?
the is a measure of a firms profit after a wider range of expenditure and incomes have been taken into account and after tax has been deducted
what is investment (capital expenditure)?
the purchase of assets such as property and equipment that will be used by a business for a considerable time
what’s return on investment?
a measure of the efficiency of an investment in financial terms, often used to compare the returns of alternative investment opportunities
define debt
money owed by an individual or organisation that need to be repaid by an agreed date
what’s long term funding?
money provided to a business that does not have to be repaid within a year it can be debt or share capital
define capital structure
the way a firm has raised the capital it requires to purchase its assets. it could be by borrowing, reinventing profit of issuing shares
what’s cash flow?
the continuous movement of money into and out of a business
what’s a financial objective?
the targets that the finance department may pursue
