Deliberately changing monetary variables like cash flows to achieve financial objectives such as improved cash flow.
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Trade Credit
Where a supplier gives a customer a period of time to pay for a bill (or invoice) for goods or services once they have been delivered.
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Profit
Occurs when the revenue of a business are greater than its costs over a period of time.
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Revenues
The amount of money received from selling goods or services over a period of time.
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Break-even point
The level of output where total revenues are equal to total costs; this is where neither a profit nor a loss is being made.
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Total revenue
The revenue earned by a business from the sale of a given quantity sold x average price.
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Total Costs
All the costs of a business; equal to fixed costs plus variable costs.
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Fixed Costs
Costs which do not vary with the amount produced, such as rent, business rates, advertising costs, administration 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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Margin of Safety
The amount of output between the actual levels of output where profit is being made and the break-even level of output; if the margin of safety is zero, then production is at or below the break-even level.
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Financing a business
How a business obtains money and other financial resources to start up, expand and if necessary pay off losses it has made.
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Internal Sources of Finance
Finance which is obtained within the business such as retained profit or the sale of assests.
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External Sources of Finance
Finance which is obtained from outside the business such as bank loans and cash from the issue of new shares.
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Retained Profit
Profit which is kept back in the business and used to pay for investment in the company.
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Equity or share capital
The monetary value of a business that belongs to the business' owners. In a company, this would be the value of their shares.
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Share
A part ownership in a business; for example a shareholder owning 25% of the shares of a business owns a quarter of the business.
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Bonds
A long-term loan where typically interest is paid at regular intervals like a year and the loan is all repaid at the end of the life of the bond. Bonds are traded on stock markets.
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De-stocking
Reducing the levels of stocks in a business.
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Overdraft 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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Break-even chart
A graph which shows total revenue and total cost, allowing the break-even point to be drawn.
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Other cards in this set
Card 2
Front
Deliberately changing monetary variables like cash flows to achieve financial objectives such as improved cash flow.
Back
Financial Management
Card 3
Front
Where a supplier gives a customer a period of time to pay for a bill (or invoice) for goods or services once they have been delivered.
Back
Card 4
Front
Occurs when the revenue of a business are greater than its costs over a period of time.
Back
Card 5
Front
The amount of money received from selling goods or services over a period of time.
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