T1.3 - Putting a business idea into practice Flashcards
Financial aims and objectives? x5
-survival
-maximum profit
-maximum sales
-increase market share
-achieve financial security
Non-financial aims and objectives? x4
-social objectives
-personal satisfaction
-challenge
-independence and control
Factors that affect aims and objectives of a business? x3
-size and age of business
-owner of business
-level of competition
formula for revenue?
quantity sold x price = revenue
Formula for total variable cost?
quantity sold x variable cost per unit = total variable cost
Formula for total cost?
total variable costs + total fixed costs = total cost
formula for profit?
revenue - cost = profit
formula for interest?
interest = total repayment - borrowed money/borrowed money x 100
Formula for break even point in units?
break even = fixed costs/sales price - variable cost per unit
formula for break even point in revenue?
break even point = break even point in units x sales price
Formula for margin of safety?
margin of safety = actual sales - break even sales
What does a business need cash to pay for ? x3
-employee
-suppliers
-overhead
Formula for net cash flow?
Net cash flow = cash inflows - cash outflows for given time
formula for closing balance?
Closing balance = opening balance + net cash flow
What is closing balance?
bank balance at end of month
What is opening balance?
bank balance at start of month
What is credit?
when customers are given longer time to pay for products
reasons for firms needing finance? x5
-start up capital
-poor cash flow
-delayed payment
-struggling
-expand
short term sources of finance for small business? x2
-overdraft
-trade credit
long term sources of finance for a small business? x6
-personal savings
-venture capital
-share capital
-loans
-retained profit
-crowd funding.
