Business Unit 2

Budget
An agreed plan establishing, in numerical or financial terms, the policy to be pursued and the anticipated outcomes of that policy. C16
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Variance analysis
The process by which the outcomes of budgets are examined and then compared with the budgeted figures. The resons for any differences (variances) are then found. C16
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Bank overdraft
An agreement whereby the holder of a current account at a bank is allowed to withdraw more money than there is in the account. The agreement specifies the maximum level of the overdraft. C17
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Short-term loan
A sum of money provided to a firm or individual for a specific, agreed purpose. Repayment of the loan will take place within 2 years, and possibly much less. C17
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Sale of assets
When a business tranfers ownership of an item that it owns to another business or individual, usually in return for cash. C17
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Sale and leaseback of assets
When assets that are owned by a firm are sold to raise cash and then rented back so that the company can still use them for an agreed period of time. C17
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Working capital
The day-to-day finance used in a business, consisting of assets (e.g. cash, stock, debtors) minus liabilities (e.g. creditors and overdrafts). C17
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Profit
The difference between the income of a business and its total cost. C18
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Profitabilty
The ability of a business to generate profit or the effieciency of a business in generating profit. C18
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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 firm's profit, while sales turnover is an excellent measure of scale. C18
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Return on capital
Ratio showing net profit (operating profit is also used) as a percentage of capital invested. C18
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Capital invested
All of the money provided to the business by owners. C18
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Liquidity
The ability to convert an asset into cash without loss or delay. C18
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Other cards in this set

Card 2

Front

The process by which the outcomes of budgets are examined and then compared with the budgeted figures. The resons for any differences (variances) are then found. C16

Back

Variance analysis

Card 3

Front

An agreement whereby the holder of a current account at a bank is allowed to withdraw more money than there is in the account. The agreement specifies the maximum level of the overdraft. C17

Back

Preview of the back of card 3

Card 4

Front

A sum of money provided to a firm or individual for a specific, agreed purpose. Repayment of the loan will take place within 2 years, and possibly much less. C17

Back

Preview of the back of card 4

Card 5

Front

When a business tranfers ownership of an item that it owns to another business or individual, usually in return for cash. C17

Back

Preview of the back of card 5
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