BUSS1 AQA FINANCIAL PLANNING KEY WORDS

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  • Created on: 16-04-13 16:57
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Price The amount paid by a consumer to purchase one unit of a product
Total Costs The total of variable and fixed costs in a business
Variable Costs Costs that vary directly in proportion to output (e.g.
materials, pay related to amounts produced or sold)
Fixed Costs Costs that do not vary with the level of output ­ e.g. rent,
salaries) Franchisee The person or company which operates a franchised
business format under license from a franchisor
Profit The difference between total sales and total costs
Total Revenue The income received from an organisation's activities.
Total revenue= price per unit X quantity of units sold
Total Contribution The difference between total revenue and total variable
costs
Contribution per unitA key number for breakeven analysis: the difference
between selling price per unit and variable cost per unit.
Breakeven Analysis Study of the relationship between total costs and
total revenue to identify the output at which a business breaks even (i.e.
makes neither a profit nor a loss).
Breakeven output (or point) The point at which the total sales of a
business equal total costs i.e. the business is making neither a profit nor a

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Cash flowThe movements of cash into ("inflows") and out of ("outflows") a
business
Cash Inflows Receipts of cash, typically arising from sales of items,
payments by debtors, loans received, rent charged, sale of assets and
interest received.
Cash Outflows Payments of cash, typically arising from the purchase of
items, payments to creditors, loans repaid or given, rental payments,
purchase of assets and interest payments.…read more

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Budget A detailed plan of income and expenses expected over a certain
period of time
Management Accounting The production and use of financial and
accounting information for internal purposes of planning review and control.
It is based on predications of what will happen and analysis of the actual
outcomes in comparison to the original plans.…read more

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ShortTerm Loan A sum of money provided to a firm or an individual for a
specific, agreed purpose. Repayment of the loan will take place within 2
years, and possibly much less.
Factoring When a factoring company (usually a bank) buys the right to
collect the money from the credit sales of an organisation.
Sale of Assets When a business transfers ownership of an item that it
owns to another business or individual, usually in return for cash.…read more

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Profit The difference between the income of a business and its total costs.
Profit= revenuetotal costs
Profitability The ability of a business to generate profit or the efficiency of
a business in generating profit.
Net Profit Margin This measures net profit (although operating profit can
be used) as a percentage of sales (turnover). Net and operating profits are
considered the best measure of a firms' profit, while sales turnover is an
excellent measure of scale.…read more

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Capital Invested All of the money provided to the business by owners.…read more

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