Topic 1(measuremnt Of Proft- Flashcards
What is revenue
Total financial income made from sales
What is the formula for revenue
Price x quantity sold
What is the formula for profit
Revenue - total costs
What is the formula for total costs
Fixed costs + variable costs
What is profit
The revenue after the costs
What is the formula for total variable costs
Variable cost per unit x output
What are other terms used for revenue
Sales
Income
Turnover
Earnings
Takings
What is formula for gross profit
Revenue - variable costs
What is formula for operating profit
Gross profit - fixed costs
What is formula for net profit
Operating profit - tax
What is cash
The money inside the business required to meet short term debts
What is profit satisfying
When a business tries to make enough profit to keep owners comfortable
What are economies of scale
When buying in bulk is cheaper than buying a certain amount of those products individually
What is limited liability
2 separate legal entities
What is unlimited liability
Business and owner are one legal entity
What is a sole trader
One person running a business with unlimited liabilty
What is a partnership
2-20 sole traders working together with unlimited liability
Advantages of being sole trader
Keep all profits
Choose working hours
Make all decisions
Own customer base
Disadvantages of being a sole trader
High rate of tax
Unlimited liability
Less sources of finance
Can’t sell shares
Personal possessions liable
100% workload
Advantages of a partnership
Shared workload
Split liability
More ideas
Wider skill set
Competitive advantage
Disadvantages of a partnership
Disagreements
Less source of finance
Shared responsibility of debt
Legal documentation can be time consuming
How is a private sector split
Unincorporated and incorporated
What businesses are incorporated
Sole trader and partnerships
What businesses are unincorporated
Public limited company (PLC)
Private limited compan(LTD)
What is public sector
Owned by the government
What are the differences between the sectors
The efficiencies and operations
What is privatisation
When the government sells a business in the public sector (sells shares)
What is nationalisation
When the government takes over a business in the private sector(buys the shares)
What does an incorporated company mean
This means they have become registered on companies house and once registered they have limited liability
What is liabilty
Who is legally responsible for the debts and assets of a business
What are assets
What the business owns
What can Ltd do?
Can invite shareholders
What is a public limited
The business is floating on the stock market so everyone can buy shares
What are venture capitalists
Organisation that employs people to invest in high risk businesses
What are business angels
Someone who invests for reasonable equity up to 1 million
