Business- Management of finance.

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  • Created by: hreid555
  • Created on: 11-12-19 13:04
What is the role of the finance department?
The role of the finance department is to provide accurate financial information to decision-makers in an organisation so that objectives can be achieved.
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Name 2 specialist tasks of the finance department?
Paying the correct wages and salaries to employees on the correct dates and Paying bills.
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What is a business plan?
A business plan is a blueprint of a business and is prepared when starting up in business or when applying for additional funding.
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Name an example of the previous question?
Bank loan.
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What does the organisation section include?
Contact details.
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What does the marketing section include?
Details of competitors and the target market.
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What does the operations section include?
Methods of production used.
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What does the human resources section include?
Type of training to be carried out.
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What does the finance section include?
Sources of finance used to fund the business.
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What is the source of finance?
Its the organisation or individual providing the funds. The source may be external or internal.
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What are the 9 different sources of finance?
Bank overdraft, bank loan, bank mortgage, grant, leasing, hire purchase, retained profit, trade credit and owners equity.
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What is leasing?
Renting the use of equipment or vehicles for a monthly fee from a leasing company.
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Name an advantage and a disadvantage?
*No large cash outlay needed and / may be more expensive than buying the items.
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What is a bank loan?
Borrowing money and repaying in regular instalments with added interest.
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Name an advantage and a disadvantage?
* Can borrow a reasonably large amount and / interest has to be paid on the amount borrowed.
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What are the 3 common uses of finance?
Business expansion, equipment/ machinery and day-to-day costs.
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What is day-to-day costs?
Paid for using trade (supplier) credit or bank overdraft.
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What are the terms 'costs' and 'revenue'?
THE MOST IMPORTANT CONCEPTS IN BUSINESS.
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A business cannot make a profit without what?
Without generating revenue from sales and controlling its business costs.
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What are the 2 costs?
Fixed costs and Variable costs.
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What do fixed costs do?
They DO NOT change without input.
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What do variable costs do?
They DO change without output.
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What does fixed costs mean?
Must be paid even if the business is producing nothing.
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What does variable costs mean?
Increase as output increases and decrease as output decreases.
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What does total costs mean?
Are all the expenses a business a business has to pay to keep it operational so it is the fixed and the variable costs added together.
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Business costs should be monitored and reduced by?
Finding a cheaper supplier of inventory to reduce the costs of purchases.
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What is revenue?
Revenue is the total amount of money received from customers for goods sold to them.
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What is break even?
The break-even point is the point where the total costs= total revenue.
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What can break even be measured as?
A value and an amount.
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What can BEP be illustrated on?
A chart.
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What is a cash budget?
A financial statement which are used to predict the amount of cash received and spent by an organisation.
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What does it help identify?
The closing cash balance.
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How can a business generate cash?
By selling products and receiving cash from the sale.
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How do businesses spend their cash balance?
Paying suppliers and paying bills.
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Why is it essential to maintain a positive cash balance?
Suppliers and bills are paid on time.
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What is the main reason why businesses fail?
Cash flow difficulties.
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What is the solution to any cash flow problem?
Plan ahead and take action.
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What are 2 cash flow problem?
Failing sale failures and buying machinery or equipment.
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How can we solve this?
increasing cash sales and using hire purchases.
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What is an income statement?
It helps a business to know whether they have made a profit or a loss on their trading activities.
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How does a finance department make good use of spreadsheets?
Graphs and charts and because information can easily input, edited and save as required.
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What else could the finance department use?
Videoconferencing and a staff database.
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What is videoconferencing?
Allows meetings between between finance managers in different locations.
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What is a staff database?
Can be accessed and when making wage calculation.
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Other cards in this set

Card 2

Front

Name 2 specialist tasks of the finance department?

Back

Paying the correct wages and salaries to employees on the correct dates and Paying bills.

Card 3

Front

What is a business plan?

Back

Preview of the front of card 3

Card 4

Front

Name an example of the previous question?

Back

Preview of the front of card 4

Card 5

Front

What does the organisation section include?

Back

Preview of the front of card 5
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