Business Studies - Finance

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Why do businesses need finance?
To rent/bu premises, lease/buy vehicles, advertise, lease/buy equipment and machinery, buy new materials and buy stock.
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Name five sources of finance?
Owners funds, bank loans/overdrafts, mortgages, famil/friends, goverment grants or lease/hire purchase agreements.
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What is price?
The amount of money a business requests customers to pay for a single item.
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What is sales?
The number of products sold within a given period of time.
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How do you calculate revenue?
Selling price multiplyed by the number of goods sold.
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What are costs?
Monetery value that is leaving the business to either set up or run the business.
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What is profit?
The excess money left over when a business has cleared it's debts.
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How do you calculate profit/loss?
Revenue - Costs.
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What is a loss?
When a businesses costs are larger than the sales revenue.
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What is cashflow?
The flows of money in and out of a business.
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Hoe does money flow in?
Through revenue (service of product).`
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How does money flow out?
When wages/expenses are paid and stocks are purchased.
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What does negative cashflow (more money out than in) mean?
Shortage of cash to pay the bills.
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What should be avoided when the cashflow is positive?
A high surplus of cash in a non interest bearing account.
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What is the aim of a business in terms of cashflow?
To gave either a positive of balanced cashflow.
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Why are cash flow forecasts important?
Easy to identify when the business may be short of cash as well as avoiding cash shortages in advance
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What five solutions to cash flow problems?
Delay payments, find new sources of inflow, reduce outflow, arrange an overdraft or gain more investment from owners.
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How do you calculate total infloe?
All inflows added together.
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How do you calculate total outflow?
All outflows added together.
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How do you calculate the net cah flow?
Inflows - Outflows.
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How do you calculate the closing balance?
Opening Balance + Net Cash Flow.
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What is teh opening balance?
Your closing balane carried forward to teh next month.
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Other cards in this set

Card 2

Front

Name five sources of finance?

Back

Owners funds, bank loans/overdrafts, mortgages, famil/friends, goverment grants or lease/hire purchase agreements.

Card 3

Front

What is price?

Back

Preview of the front of card 3

Card 4

Front

What is sales?

Back

Preview of the front of card 4

Card 5

Front

How do you calculate revenue?

Back

Preview of the front of card 5
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