Business mock preparation

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What is enterprise?
the willingness of an individual or a business to take risks, show initiative and undergo new ventures
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What is the meaning of the word 'risk'?
a chance of damage or loss of a business as a result of making a decision
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What is a franchise?
the right given by one business to another to sell goods or services using its name
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What is a franchisee?
a business that agrees to manufacture, distribute or provide a branded product, under license by a franchisor
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What is a franchisor?
a business that sells the right to the franchisee to sell its products, in return for a royalty payment
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What are the benefits of a franchise?
training, equipment, exclusive area, finding customers and brand name
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What are benefits for the franchisee?
franchisor gives on-going support & covers tax issues, the selection process eliminates other people, franchisor sets out the money
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What are the disadvantages for the franchisee?
initial investement is very high, less freedom, franchisor can end the deal whenever
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What are fixed costs?
costs that do not change with the output produced such as advertising, administrative costs, salaries and rent
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What are variable costs?
costs that change directly with the number of products made by a business such as the cost of raw materials
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What are total costs?
the overall cost of a business; Fixed cost + Variable cost
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What is revenue/sales revenue/turnover?
amount of income received by a business from selling goods and services over a period of time
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What is sales volume?
number of items/products/services sold by a business over a period of time
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What is cash flow?
flow of cash into and out of a business
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What are inflows?
cash flowing into a business (receipts)
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What are outflows?
cash flowing out of a business (payments)
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What is net cash flow?
inflows-outflows; receipts-payments
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What is insolvency?
when a business can no longer pay its debts
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What is a cash flow forecast?
prediction of net cash flow over a period of time
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What is the opening balance?
amount of money in a business at the start of the month
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What is the closing balance?
amount of money in a business at the end of the month
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What is cumulative cash flow?
sum of cash that flows into a business over time
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What is long term finance?
sources of money for businesses that are borrowed or invested for more than a year
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Give examples of long term sources
share capital, loans, leasing, grants, retained profit
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What is short term finance?
sources of money for businesses that may have to be paid rather quickly like overdraft. within a year
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Examples of short term sources
overdraft, trade credit, factoring
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What are shareholders?
owners of a company
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What is a share?
part ownership in a business
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What are personal savings?
money that is set aside and not spent by an individual
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What is share capital?
the monetary value of a company which belongs to its shareholders
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What is a venture capitalist?
individual or a company that buys shares in another company. They have a long term view of selling the shares for a profit.
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What is a loan?
borrowing a sum of money which has to be repaid with interest over a period of time
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What is security (collateral)?
assests owned by a business which guarantees the repayments of a loan. If the business fails to pay off the loan, the lender can sell what they offered as security
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What is mortgage?
loan where property is used as security
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What is a dividend?
share of the profits of a company received by shareholders
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What is retained profit?
profit which is kept back in the business and is used to pay for investment in the business
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What is leasing?
renting equipment or premises
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What is an overdraft facility?
borrowing money from the bank by drawing more money that is actually in a current account. Interest is charged on the amount overdrawn
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What is factoring?
source of finance where a business is able to receive cash immediately for the invoices it has issued from a factor, such as a bank, instead of waiting 30 days
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What is trade credit?
when a supplier allows a period of time for the payment of the supplies
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Other cards in this set

Card 2

Front

What is the meaning of the word 'risk'?

Back

a chance of damage or loss of a business as a result of making a decision

Card 3

Front

What is a franchise?

Back

Preview of the front of card 3

Card 4

Front

What is a franchisee?

Back

Preview of the front of card 4

Card 5

Front

What is a franchisor?

Back

Preview of the front of card 5
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