1.2 Showing Enterprise

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Financial objectives
Targets expressed in money terms such as making a profit, earning income or building wealth.
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Sales revenue
The amount of income recieved from selling goods or services over a period of time.
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Sales volume
The number of items or products or services sold by a business over a period of time.
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Fixed costs
Costs which do not vary with the output produced such as rent, business rates, advertising costs and salaries.
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Variable costs
Costs which change directly with the number of products made by a business such as the cost of buying raw materials.
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Total costs
All the costs of a business; it is equal to fixed costs plus variable costs.
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Profit
Occurs when the revenues of a business are greater than its costs over a period of time.
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Loss
Occurs when the revenues of a business are less than its costs over a period of time.
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Cash
Notes, coins and money in the bank.
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Cash flow
The flow of cash into and out of a business
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Inflow
The cash flowing into a business, its receipts.
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Outflow
The cash flowing out of a business, its payments.
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Net cash flow
The receipts of a business minus its payments.
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Insolvency
When a business can no longer pay its debts.
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Cash flow forecast
A prediction of how cash will flow through a business in a period of time in the future.
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Opening balance
The amount of money in a business at the start of the month.
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Closing balance
The amount of money in a business at the end of the month.
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Cumulative cash flow
The sum of cash that flows into a business over time.
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Trade credit
Where a supplier gives a customer a period of time to pay a bill (or invoice) for goods or services once they have been delivered.
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Stocks
The materials that a business holds. Some could be materials waiting to be used in production or some could be finished stock waiting to be delivered to customers.
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Business plan
A plan for the development of a business giving forecasts of items such as sales, costs and cash flow.
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Long term finance
Sources of money for businesses that are borrowed or invested typically for more than a year.
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Short term finance
Sources of money for businesses that may have to be repaid either immediately or fairly quickly, such as an overdraft, usually within a year.
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Share
A part ownership in a business; for example a shareholder owning 25 per cent of the shares of a business owns a quarter of the business.
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Personal savings
Money that has been set aside and not spent by individuals and households.
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Share capital
The monetary value of a company which belongs to its shareholders; for example, if five people each invest £10,000 into a busines, the share capital will be £50,000.
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Shareholders
The owners of a company.
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Venture capitalist
An individual or company which buys shares in what they hope will be a fast growing company with a long-term view of selling shares at a profit.
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Loan
Borrowing a sum of money which has to be repaid with interest over a period of time, such as 1-5 years.
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Security
Assets owned by a business which are used to guarantee repayments of a loan; if a business fails to pay off the loan, the lender can sell what has been offered as security.
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Mortgage
A loan where property is used as security.
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Dividend
A share of the profits of a company recieved by shareholders who own shares.
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Retained Profit
Profit which is kept back in a business and used to pay for investment in the business.
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Leasing
Renting equipment or premises.
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Overdraft facility
Borrowing money from a bank by drawing more money than is actually in a current account. Interest is charged on the amount overdrawn.
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Factoring
A source of finance where a business is able to recieve cash immediately for the invoices it has issued from a factor, such as a bank, instead of waiting the typical 30 days to be paid.
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Other cards in this set

Card 2

Front

The amount of income recieved from selling goods or services over a period of time.

Back

Sales revenue

Card 3

Front

The number of items or products or services sold by a business over a period of time.

Back

Preview of the back of card 3

Card 4

Front

Costs which do not vary with the output produced such as rent, business rates, advertising costs and salaries.

Back

Preview of the back of card 4

Card 5

Front

Costs which change directly with the number of products made by a business such as the cost of buying raw materials.

Back

Preview of the back of card 5
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