Finance key words (unit one)

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  • Created by: jaaaz_v
  • Created on: 20-05-15 06:20
Revenue
The income that's earned by a business. It can be found my multiplying sales by the price of the product.
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Costs
The expenses that are pad out to run the business. (Direct costs=indirect costs=total costs)
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Direct costs
The expenses that are put into making particular products. Eg. the cost of factory labour, raw materials, and operating machinery.
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Indirect costs
The overheads of running a business. Eg management salaries, telephone bills, and rent.
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Fixed costs
These don't very with output. They're mostly indirect costs, so they even need to be paid when the firm earns nothing.
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Variable costs
These will increase as the firm increases its output. They're mostly direct costs, eg, factory labour and raw materials.
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Average costs
Is how much each product costs to make. To find this, divide the total cost by output.
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Profit (or loss)
Profit is the difference between revenue and costs over a period of time. It can be found by subtracting revenue from costs. If a business has higher costs than revenue, they will make a loss instead of a profit.
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Cash flow
The flow of all of the money going in and coming out of a business.
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Net cash flow
The difference between cash inflow and cash outflow over a period of time.
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Cash flow forecast
When businesses forecast their sales volume to estimate what there revenue will be. The predictions that are made are normally based on the sales of the previous months or years.
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Credit terms
Tell you how long after agreeing to buy a product the customer has to pay
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Poor cash flow
When there is not enough cash in the business to meet its day-to-day needs (a lack of working capital)
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Creditors
People or firms that are owed money by the business.
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Other cards in this set

Card 2

Front

The expenses that are pad out to run the business. (Direct costs=indirect costs=total costs)

Back

Costs

Card 3

Front

The expenses that are put into making particular products. Eg. the cost of factory labour, raw materials, and operating machinery.

Back

Preview of the back of card 3

Card 4

Front

The overheads of running a business. Eg management salaries, telephone bills, and rent.

Back

Preview of the back of card 4

Card 5

Front

These don't very with output. They're mostly indirect costs, so they even need to be paid when the firm earns nothing.

Back

Preview of the back of card 5
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