Theme 2 Key terms definitions Flashcards

1
Q

What is Internal Finance?

A

Funds raised from within the business, such as owner’s capital, personal savings, or retained profit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is Retained Profit?

A

Profit that is reinvested back into the business rather than distributed to shareholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is Sale of Assets?

A

Selling off a company’s assets to raise funds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is External Finance?

A

Funds sourced from outside the business, including bank loans, overdrafts, and share capital.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is a Bank Loan?

A

A fixed amount of money borrowed from a bank, repayable with interest over a set period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is an Overdraft?

A

An agreement allowing a business to withdraw more money from its bank account than is currently available, up to an agreed limit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is Share Capital?

A

Money raised by issuing shares in the company to investors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is Venture Capital?

A

Investment from individuals or firms in exchange for equity, typically used by startups and small businesses with high growth potential.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is Crowdfunding?

A

Raising small amounts of money from a large number of people, typically via online platforms.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is Trade Credit?

A

An arrangement where suppliers allow businesses to receive goods or services and pay for them at a later date.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is Limited Liability?

A

A legal status where a business owner’s financial liability is restricted to their investment in the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is Unlimited Liability?

A

A situation where business owners are personally responsible for all the debts of the business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is a Cash Flow Forecast?

A

A financial document predicting the future cash inflows and outflows over a specific period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is Sales Forecasting?

A

Estimating future sales volumes and revenue based on market analysis and historical data.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are Fixed Costs?

A

Expenses that do not change with the level of goods or services produced, such as rent and salaries.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are Variable Costs?

A

Expenses that vary directly with the level of production, such as raw materials and direct labor costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the Break-Even Point?

A

The level of sales at which total revenues equal total costs, resulting in neither profit nor loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is Contribution?

A

The amount remaining from sales revenue after variable costs have been deducted, contributing towards fixed costs and profit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is Gross Profit?

A

Sales revenue minus the cost of goods sold.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is Operating Profit?

A

Gross profit minus operating expenses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is Net Profit?

A

Operating profit minus interest and taxes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is Liquidity?

A

The ability of a business to meet its short-term financial obligations.

23
Q

What is the Current Ratio?

A

A liquidity ratio calculated as current assets divided by current liabilities, indicating the company’s ability to pay short-term obligations.

24
Q

What is the Acid Test Ratio?

A

A stringent liquidity ratio that measures a company’s ability to cover its short-term liabilities without relying on the sale of inventory; calculated as (Current Assets - Inventory) / Current Liabilities.

25
Q

What is Capacity Utilization?

A

The extent to which a business uses its production capacity; calculated as (Actual Output / Maximum Possible Output) × 100%.

26
Q

What is Productivity?

A

A measure of efficiency, typically calculated as output per worker over a given period.

27
Q

What is Quality Control?

A

The process of inspecting products to ensure they meet the required quality standards.

28
Q

What is Quality Assurance?

A

A proactive approach focusing on preventing defects by ensuring quality standards are met throughout the production process.

29
Q

What is Total Quality Management (TQM)?

A

A management philosophy that seeks continuous improvement in all aspects of a business by involving all employees.

30
Q

What is Just-In-Time (JIT)?

A

An inventory management system where materials are ordered and received only as they are needed in the production process, reducing inventory costs.

31
Q

What are Economies of Scale?

A

Cost advantages that a business can achieve due to an increase in production, leading to a reduction in average costs per unit.

32
Q

What are Diseconomies of Scale?

A

The point where a company grows so large that the costs per unit increase, leading to inefficiencies.

33
Q

What is Buffer Stock?

A

A reserve of extra inventory maintained to guard against unforeseen shortages or demand spikes.

34
Q

What is Lead Time?

A

The time interval between ordering and receiving goods or services.

35
Q

What is Reorder Level?

A

The predetermined inventory level at which new stock is ordered to replenish supplies before they run out.

36
Q

What is Outsourcing?

A

Contracting out certain business functions or processes to external providers to reduce costs or focus on core activities.

37
Q

What is Kaizen?

A

A Japanese term meaning ‘continuous improvement,’ involving all employees working together proactively to achieve regular, incremental improvements in the manufacturing process.

38
Q

What is Critical Path Analysis (CPA)?

A

A project management tool that outlines the sequence of crucial steps or tasks necessary to complete a project, identifying the longest path and potential bottlenecks.

39
Q

What is Contingency Planning?

A

The process of preparing for unexpected events by developing plans to mitigate potential negative impacts on a business.

40
Q

What does the Consumer Rights Act?

A

It protects consumers by ensuring products are satisfactory quality, fit for purpose, and as described.

41
Q

What does the Health and Safety at Work Act 1974 require?

A

It requires businesses to provide a safe working environment for employees.

42
Q

What does the National Minimum Wage Act 1998 ensure?

A

It ensures workers receive a legal minimum hourly wage.

43
Q

What does the Competition Act 1998 prevent?

A

It prevents anti-competitive practices like price-fixing and monopolies.

44
Q

What does the Environmental Protection Act 1990 regulate?

A

It regulates waste disposal and pollution control for businesses.

45
Q

What is Depreciation

A

When the value of a currency falls, making exports cheaper and imports more expensive.

46
Q

Define economic growth

A

The increase in a country’s output of goods and services over time, usually measured by GDP (Gross Domestic Product).

47
Q

What is A recession?

A

A period of negative economic growth for two consecutive quarters, leading to lower demand and rising unemployment.

48
Q

What is boom?

A

A period of rapid economic growth with high consumer spending, investment, and employment.

49
Q

define Inflation

A

The rate at which the general price level of goods and services rises, reducing the purchasing power of money.

50
Q

What is the consumer price index (CPI)

A

A measure of inflation based on the average price change of a basket of goods and services over time.

51
Q

Define Interest rates

A

The cost of borrowing or the reward for saving, set by central banks like the Bank of England.

52
Q

What are exchange rates?

A

The value of one currency in terms of another, affecting the cost of imports and exports.

53
Q

What is Appreaciation

A

When the value of a currency rises, making exports more expensive and imports cheaper.

54
Q

Define boom

A

A period of rapid economic growth with high consumer spending, investment, and employment.