TEST, AAAA Flashcards
Inventory (stock):
materials and goods required to allow
for the production and supply of products to the customer.
Economic order quantity:
the optimum or least-cost
quantity of stock to re-order taking into account delivery
costs and stock-holding costs.
Re-order quantity:
The number of units ordered each time.
Lead time:
the normal time taken between ordering new
stocks and their delivery
Buffer inventories:
the minimum inventory level that
should be held to ensure that production could still take
place should a delay in delivery occur or should production
rates increase.
Just-in-time:
this inventory-control method aims to avoid
holding inventories by requiring supplies to arrive just as
they are needed in production and completed products
are produced to order.
Start-up capital:
the capital needed by an entrepreneur
to set up a business.
Working capital:
the capital needed to pay for raw
materials, day-to-day running costs and credit of ered to
customers. In accounting terms working capital = current
assets – current liabilities.
Liquidity:
the ability of a firm to be able to pay its shortterm debts.
Liquidation:
when a firm ceases trading and its assets are
sold for cash to pay suppliers and other creditors.
Capital expenditure:
the purchase of assets that are
expected to last for more than one year, such as building
and machinery.
Revenue expenditure:
spending on all costs and assets
other than fixed assets and includes wages and salaries
and materials bought for stock.
Overdraft:
bank agrees to a business borrowing up to an
agreed limit as and when required.
Factoring:
selling of claims over trade receivables to a
debt factor in exchange for immediate liquidity – only a
proportion of the value of the debts will be received as cash.
Hire purchase:
an asset is sold to a company that agrees
to pay fixed repayments over an agreed time period – the
asset belongs to the company.
Leasing:
obtaining the use of equipment or vehicles and
paying a rental or leasing charge over a fixed period, this
avoids the need for the business to raise long-term capital
to buy the asset; ownership remains with the leasing
company
Equity finance:
permanent finance raised by companies
through the sale of shares.
Long-term loans:
loans that do not have to be repaid for
at least one year.
Long-term bonds or debentures:
bonds issued by companies to raise debt finance, often with a fixed rate of interest.
Rights issue:
existing shareholders are given the right to
buy additional shares at a discounted price.
Venture capital:
risk capital invested in business start-ups
or expanding small businesses that have good profit potential
but do not find it easy to gain finance from other sources.
Crowd funding:
the use of small amounts of capital from a
large number of individuals to finance a new business venture.
Microfinance:
providing financial services for poor and low-income customers who do not have access to banking services, such as loans and overdrafts offered by traditional commercial banks.
Business plan:
a detailed document giving evidence
about a new or existing business, and that aims to convince
external lenders and investors to extend finance to the
business.
