Unit 5 (Financial information and decisions) Flashcards
Start-up capital
Money required to set up a business and keep the business operating until the business breaks even
Working Capital Calculation
Current assets - Current Liablilities
Working Capital
Capital available to the business in the short term to pay day-to-day expenses
Capital expenditure
Money spent on fixed assets
Revenue expenditure
money spent on day-to-day expenses which do not involve the purchase of a long-term asset
Internal Profit
the profit obtained from the business itself
External Profit
Profit obtained from sources outside of the business
Retained Profit
Profit kept in the business after the owners have taken their share of the profits
Sale of existing assets
Existing assets that could be sold which are no longer required by the business
Bank loan
A sum of money obtained from a bank which must be repaid with interest
Debentures
long-term loan certificates issued by limited companies
Factoring of debt
when a business sells its accounts receivables to a third party at a discount
Micro-finance
Lending small amounts of finance to small businesses to those who can’t access finance from another source
Overdraft
Banks allow businesses to take additional money out of their account up to a certain limit
Trade Credit
Delaying payment to suppliers for an agreed time period
Cash flow
Cash flow in and out of the business over a period of time
Cash inflow
Cash going into a business
Cash outflow
Cash going out of a business
Profit
Sales revenue - total costs of making product/service
Cash flow forecast
Estimate of future cash inflows and outflows usually calculated month by month to ensure there is enough cash to pay short-term debts
Opening cash balance
The previous months closing balance
Closing cash balance
opening balance + net cash flow
Net cash flow
total inflow - total outflow
Income statements
is a financial statement of a company and shows the company’s revenues and expenses during a particular period.
