terms + definitions unit 5 Flashcards
financial objective
goal or target pursued by the finance function within an organisation
profit
surplus of total revenue over total costs for a business over a trading period
cash flow
the movement of cash in and out of a business over a period of time
gross profit
income received from sales minus the costs of goods and services sold
operating profits
financial surplus arising from a business’s normal trading activities and before taxation
profit for the year
a measure of a business’s profits that take into account a wider range of expenditures and incomes including taxation
revenues
the earnings or income generated by a firm as a result of its trading activities
capital expenditure
spending undertaken by businesses to purchase non-current assets such as vehicles and property. it is another term for investment
capital structure
refers to the way in which a business has raised the capital it requires to purchase its assets
budgets
financial plans that forecast revenue from sales and expected costs over a time period
variance analysis
process of investigating any differences between forecast data and actual figures
cash flow forecast
sate the inflows and outflows of cash that the managers of a business expect over some future period
tarde credit
offered when purchases are allowed a period of time (30,60,90 days) to pay for products they have bought
break-even output
that level of output or production ate high total costs exactly equal revenue from sales
contribution
difference between revenue and variable costs
margin of safety
measures the amount by which a business’s current level of output exceeds break-even output
profitability
a measure of financial performance that compares a business’s profits to some other factors such as revenue
profit margin
ratio that expresses a business’s profit as a percentage of its revenue over some trading period
bank loan
an amount of money provided to a business for a stated purpose in return for a payment in the form of interest charges
overdraft
when a business is allowed to spend more than it holds in its current bank account up to an agreed limit
venture capital
funds advanced to businesses thought to be relatively high risk in the form of share and loan capital
share capital
finance invested intoa. com0any as a result of the sale of shares in the business
mortgages
long-term loans, repaid over periods of up to fifty years, and used too purchase property
opportunity cost
best alternative foregone as a result of a decision
