Unit 5 - Decision making to improve financial performance Flashcards
Financial objective
A target set for the finance function
Cash flow
The movement of cash into and out of a business over time
Capital expenditure
Spending undertaken by businesses to purchase non-current assets
Capital structure
The way in which a business has raised the capital it requires to purchase its assets
Budgets
Financial plans for cost/revenues for a future period of time - based on a firms objectives
Variance analysis
The process of investigating any differences between forecast data and actual figures
Break-even output
The level of output at which costs exactly equal revenue
Contribution
The difference between revenue and variable costs
Margin of safety
The difference between the actual output and the break-even output of a business
Trade credit
The period of time given by suppliers before customers have to pay for products
Bank loan
An amount of money provided to a business for a stated purpose in return for a payment in form of interest charges
Overdraft
Exists 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 into a company as a result of the sale of shares in the business
Mortgage
Long-term loans, repaid over periods of time up to 50 years and used to purchase property
