A source of finance where a business is able to recieve cash immediately for the invoices it has issued.
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Retained Profit
Profit which is kept back in the business and used to pay for investment in the business.
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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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Dividend
A share of profits of a company recieved by shareholders who own shares.
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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 business, the share capital will be £50,000.
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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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SMART
Specific, measurable, achievable, realistic and time constrained.
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Determination
The drive to succeed in business. To show commitment to an idea or setting up a busines.
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Initiative
To work independently and be able to make the first move in business.
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Taking risks
A skill shown by entrepreneurs. It can be risky to own your own business.
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Making decisions
To be in charge of making a good judgement. An entrepreneur will listen and take in information to ensure they make the right decision.
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Planning
Planning is essential to any successful business. Clear objectives have to be set for the long term and how these objectives will be met in short term.
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Persuasion
A skill of an entrepreneur. To be able to convince a customer they should buy the product/service. Or it could also mean negotiating with a supplier to lower their prices.
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Showing leadership
Entrepreneurs should have a vision of where the business is heading, be good at planning and have self-confidence.
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Revenues
The amount of income recieved from selling goods or services over a period of time.
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Total Revenue
TR (Total Revenue) = P (Price) x Q (Quantity)
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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, administration costs.
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Total costs
All the costs of a business; it is equal to fixed costs plus 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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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 that the costs over a period of time.
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Profit/Loss
Total Revenue - Total Cost
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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 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
Materials that a business holds. Some could be materials waiting to be used in the production process and 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 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 with immediately or fairly quickly, such as an overdraft, usually within a year.
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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 the shares at a profit.
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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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Other cards in this set
Card 2
Front
Profit which is kept back in the business and used to pay for investment in the business.
Back
Retained Profit
Card 3
Front
Borrowing a sum of money which has to be repaid with interest over a period of time, such as 1-5 years.
Back
Card 4
Front
A share of profits of a company recieved by shareholders who own shares.
Back
Card 5
Front
The monetary value of a company which belongs to its shareholders, for example, if five people each invest £10,000 into a business, the share capital will be £50,000.
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