Business mock preparation
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- Created by: Nk Anastasia
- Created on: 07-01-15 21:40
What is enterprise?
the willingness of an individual or a business to take risks, show initiative and undergo new ventures
1 of 40
What is the meaning of the word 'risk'?
a chance of damage or loss of a business as a result of making a decision
2 of 40
What is a franchise?
the right given by one business to another to sell goods or services using its name
3 of 40
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
5 of 40
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
8 of 40
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
10 of 40
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
22 of 40
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
33 of 40
What is mortgage?
loan where property is used as security
34 of 40
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
Card 4
Front
What is a franchisee?
Back
Card 5
Front
What is a franchisor?
Back
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