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Business > Theme 2 Key Words > Flashcards

Theme 2 Key Words Flashcards

1
Q

Acid Test Ratio

A

Similar to the current ratio but excludes stocks from current assets. A more severe test of liquidity

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2
Q

Administration

A

A failing business appoints a specialist to rescue the business or wind it up

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3
Q

Appreciation of a Currency

A

A rise in the value of a currency

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4
Q

Assets

A

Resources that belong to a business

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5
Q

Authorised Share Capital

A

The maximum amount that can be legally raised

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6
Q

Average Cost/Unit Cost

A

The cost of producing one unit, calculated by dividing the total cost by the output

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7
Q

Bank Overdraft

A

An agreement between a business and a bank that means a business can spend more money that it has in its account. The overdraft limit is agreed and interest is only charged when the business goes overdrawn

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8
Q

Barriers to entry

A

Obstacles that make it difficult for new firms to enter a market

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9
Q

Batch Production

A

A method that involves completing one operation at a time on all units before performing the next

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10
Q

Boom

A

The peak of the economic cycle where GDP is growing at its fastest

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11
Q

Break-even

A

When a business generates just enough revenue to cover its total costs

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12
Q

Break-even Chart

A

A graph containing the total cost and total revenue lines, illustrating the break-even output

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13
Q

Break-even Output

A

The output a business needs to produce so that its total revenue and total costs are the same

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14
Q

Break-even Point

A

The point at which total revenue and total costs are the same

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15
Q

Budget

A

A quantitative economic plan prepared and agreed in advance

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16
Q

Budgetary Control

A

A business system that involves making future plans, comparing the actual and planned results and then investigating the causes of any differences

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17
Q

Buffer Stocks

A

Stocks held as a precaution to cope with unforeseen demand

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18
Q

Capacity Utilisation

A

The use that a business makes of its resources

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19
Q

Capital

A

Money put into the business by the owners

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20
Q

Capital Gain

A

The profit made from selling a share for more than it was bought

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21
Q

Capital Intensive

A

Production method that make more use of machinery relative to labour

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22
Q

Capital Productivity

A

The amount of output each unit of capital produces

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23
Q

Cartel

A

A group of businesses who join together to agree on pricing and output in a market in attempt to gain higher profits

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24
Q

Cash inflows

A

The flow of money into a business

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25
Q

Cash outflows

A

The flow of money out of a business

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26
Q

Cash flow

A

Cash flow forecast predictions of expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of the month

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27
Q

Cell Production

A

Involves producing a family of products in a small self-contained unit within a factory

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28
Q

Collateral

A

An asset that might be sold to pay a lender when a loan cannot be repaid

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29
Q

Consumer Income

A

The amount of income remaining after taxes and expenses have been deducted from wages

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30
Q

Consumer Trends

A

The habits or behaviours of consumers that determine the goods and services they buy

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31
Q

Contract of Employment

A

A written agreement between an employer and an employee in which each has certain obligations

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32
Q

Contribution

A

The amount of money left over after variable costs have been subtracted from revenue. The money contributes towards fixed costs and profit

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33
Q

Cost of sales

A

The direct costs of a business

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34
Q

Crowd Funding

A

Where a large number of individuals invest in a business or project on the internet, avoiding the use of a bank

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35
Q

Current Assets

A

Liquid assets i.e. those assets that will be converted into cash within one year

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36
Q

Current Liabilities

A

Money owed by the business that must be repaid within one year

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37
Q

Current Ratio

A

Assesses whether or not a business has enough resources to meet any debts that arise in the next 12 months. Found by dividing current liabilities into current assets

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38
Q

Debenture

A

A long term loan to a business

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39
Q

Deflation

A

A fall in the general price level

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40
Q

Depreciation

A

A fall in the value of a currency

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41
Q

Discrimination

A

Favouring one person over another e.g. race/gender/age/disability

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42
Q

Downturn

A

A period in the economic cycle where GDP grow, but more slowly

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42
Q

Division of Labour

A

Specialisation in specific tasks or skills by an individual

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42
Q

Downsizing

A

The process of reducing capacity, usually by laying off staff

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43
Q

Economic Growth

A

The rise in output of an economy as measured by the growth in GDP as a percentage

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43
Q

Economic Variables

A

Measures within the economy which have effects on business and consumers e.g. employment, inflation, exchange rates

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44
Q

Efficiency

A

Producing a level of output where average cost is minimised

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44
Q

Equities

A

Another name for an ordinary share

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45
Q

Exceptional costs

A

A one-off cost, such as a large bad debt

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46
Q

Exchange Rate

A

The price of one currency in terms of another

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47
Q

External Factors

A

Factors beyond the control of businesses cause it to collapse

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48
Q

External Finance

A

Money raised form outside the business

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49
Q

Extrapolation

A

Forecasting future trends based on past data

50
Q

Fiscal Policy

A

Using changes in taxation and government expenditure to manage the economy

51
Q

Fixed Cost

A

A cost that does not change as a result of change in output in the short run

52
Q

Flow Production

A

Large scale production of a standard product, where each operation on a unit is performed continuously one after the other, usually on a production line

53
Q

Forecasting

A

A business process, assessing the probable outcome using assumptions about the future

54
Q

Full Capacity

A

The point where a business cannot produce any more output

55
Q

Gross Domestic Product

A

A common measure of national income, output or employment

56
Q

Gross Profit

A

The difference between revenue/turnover and cost of sales

57
Q

Gross Profit Margin

A

Gross profit expressed as a percentage of revenue/turnover

58
Q

Historical Figures

A

Quantitative information based on past trading records

59
Q

Incorporated Business

A

A business model in which the business and the owners have separate legal identities

60
Q

Inflation

A

A general rise in prices

61
Q

Intangible Assets

A

Non-physical assets, such as brand names, patents and customer lists

62
Q

Internal Factors

A

Factors that businesses are able to control cause it to collapse

63
Q

Inventories

A

Stock such as raw materials and finished goods held by a business

64
Q

Issued share capital

A

Amount of current share capital arising from the sale of shares

65
Q

Job Production

A

A method of production that involves employing all factors to complete one unit of output at a time

66
Q

Kaizen

A

A Japanese term that means continuous movement

67
Q

Labour Intensive

A

Production methods that make more use of labour relative to machinery

68
Q

Labour Productivity

A

The amount of output each unit of labour produces

69
Q

Lead time

A

The time between placing the order and the delivery of goods

70
Q

Lean production

A

An approach to operations that focuses on the reduction of resource use

71
Q

Lease

A

A contract to acquire the use of resources such as property or equipment

72
Q

Liabilities

A

Money owed by the business to banks and suppliers for example

73
Q

Limited Liability

A

A legal status that means shareholders can only lose the original amount they invested in the business

74
Q

Liquidity

A

The ease with which assets can be converted into cash

75
Q

Long Run

A

The time period where all factors of production are variable

76
Q

Long term finance

A

Money borrowed for more than one year

77
Q

Margin of Safety

A

The range of output between the break-even level and current level of output, over which a profit is made

78
Q

Monetary Policy

A

Using changes in the interest rate and money supply to manage the economy

79
Q

Net Cash Flow

A

The difference between the cash flowing in and the cash flowing out of a business in a given time period

80
Q

Non-current assets

A

Long term resources that will be used by the business repeatedly over a period of time

81
Q

Non-current liabilities

A

Money owed by the business for more than one year, sometimes called long term liabilities

82
Q

Operating Profit

A

The difference between gross profit and business overheads, such as selling and administrative expenses

83
Q

Operating Profit Margin

A

Operating profit expressed as a percentage of revenue/turnover

84
Q

Outsourcing

A

Giving work to sub-contractors to reduce cost

85
Q

Overtrading

A

The situation where a business does not have enough cash to support its production and sales, usually because it is growing too fast

86
Q

Over-utilisation

A

The position where a business is running at full capacity and straining resources

87
Q

Peer-to-peer lending (P2PL)

A

Where individuals lend to other individuals without prior knowledge of them , on the internet

88
Q

Permanent Capital

A

Share capital that is never repaid by the company

89
Q

Planning

A

A plan for the development of a business, giving details such as the products to be made, resources needed and forecasts such as costs, revenues and cash flows

90
Q

Production

A

The transformation of resources into goods and services

91
Q

Production cost budget

A

A firm’s planned production costs for a future period of time

92
Q

Productivity

A

The output per unit of input per time period

93
Q

Profit

A

The difference between total costs and total revenue, it can be negative

94
Q

Profit for the year/Net Profit

A

The difference between operating profit and interest and exceptional items

95
Q

Profit for the Year margin/Net Profit margin

A

Net profit after tax, expressed as a percentage of revenue/turnover

96
Q

Quality

A

Features of as product that allow it to satisfy customer’s needs, it may refer to some standard of excellence

97
Q

Quality Assurance

A

A method of working for businesses that takes into account customer’s wants when standardising quality. It often involves guaranteeing that quality standards are met

98
Q

Quality Control

A

Making sure that the quality of a product meets specified quality performance criteria

99
Q

Recession

A

A less severe form of depression

100
Q

Recover or uprising

A

A period where economic growth begins to increase again after a recession

101
Q

Re-order level

A

The level of current stock when new orders are placed

102
Q

Re-order quantity

A

The amount of stock ordered when an order is placed

103
Q

Revenue/Turnover

A

The total income of a business resulting from sales of goods or services

104
Q

Sales Budget

A

A firm’s planned sales for future period of time - can be measured in terms of volume/revenue

105
Q

Sales Forecast

A

Projection of future sales revenue, based on previous sales data

106
Q

Sales revenue

A

The value of output sold in a particular time period

107
Q

Sales volume

A

The quantity of output sold in a particular time period

108
Q

Share capital

A

Money introduced into the business through the sale of shares

109
Q

Shareholders’ Equity

A

The amount of money owned by the business to the shareholders

110
Q

Short-term borrowing

A

Money borrowed for 12 months or less

111
Q

Slump or Depression

A

The bottom of the economic cycle where GDP starts to fall with significant increases in unemployment

112
Q

Statement of Comprehensive Income

A

A financial document showing a company’s income and expenditure over a particular time period of usually one year

113
Q

Statement of Financial Position

A

A summary at a particular point in time of the value of a firm’s assets, liabilities and capital

114
Q

Time Series Data

A

A method that allows a business to predict future levels from past figures

115
Q

Total Costs

A

The entire cost of producing a given level of output

116
Q

Total Quality Management

A

A managerial approach that focuses on quality and aims to improve the effectiveness, flexibility and competitiveness of the business

117
Q

Total Revenue

A

The amount of money the business receives form selling output

118
Q

Trade and other receivables

A

Money owed by the business by customers and any prepayments made by the business

119
Q

Trade and other payables

A

Money owed by the business to suppliers and utilities, sometimes called trade creditors

120
Q

Unincorporated Businesses

A

A business model in which there is no legal difference between the owners and the business

121
Q

Unlimited Liability

A

A legal status which means that business owners are liable for all business debt

122
Q

Unsecured Loans

A

Where the lender has no protection if the borrower fails to repay the money owed

123
Q

Variance

A

The difference between actual financial outcomes and those budgeted

124
Q

Variance Analysis

A

The process of calculating variances and attempting to identify their causes

125
Q

Venture Capitalism

A

Providers of funds for small or medium sized companies that may be considered too risky for other investors

126
Q

Working Capital

A

The funds left over to meet day to day expenses after current debts have been paid. Calculated by subtracting current liabilities from current assets

127
Q

Zero-based budgeting

A

A system of budgeting where no money is allocated for costs or spending unless they can be justified by fund holder

Business (3 decks)

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