Financial information and decisions

Responsibility of the finance department
In a business, the finance department is responsible for capital expenditure (money spent on purchasing fixed assets which are used in the long term), and revenue expenditure (used to cover short-term daily expenses)
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Start-up -capital
The money required to start a new business (office space, factories.
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Capital for expansion
The money needed in order for a business to expand and grow number of outputs
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Working capital
The money used for staff wages, purchase stock etc.
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Internal capital
Money obtained within the business, this includes retained profit, owners funds, working capital, sales of assets
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External capital
Mostly debt and equity of a business
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Debt
Money that must be repaid back to banks with interest
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Equity
Raising money by selling shares in the company
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Short term finance
Can be divided into short-term and long-term. Short term includes debt factoring, trade credit and overdraft.
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Long term finance
Long term include leasing, bank loans, grants
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Micro finance in developing economies
Allows businesses with very low budgets to start up or expand a small business.
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Loans
Money that is given by the bank which needs to be repaid on a monthly basis
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Debtors
The business who is in debt and owes the money
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Creditors
Banks who give the money in the form of credit
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Cash-flow
Term used to describe money that the company has to plan the day-to-day running of a busiess
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Cash-outflow
Money going out of the business to pay for bills, raw materials
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Profit
A financial gain which a business has
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Difference between profit and cash
Profit refers to the revenue-all other expenses, while cash is the money coming in and out of the business
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Revenue
All the income which is made by a business
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Cost of sales
Costs associated with the making of the product or supplying the service
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Gross profit
The big profit that shows the money made after only costs of sales have been subtracted
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Assets
Items or entries in a businesses account that it owns
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Non-current assets
Large purchases which should last longer than a year, examples include property, technology, vehicles
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Current assets
Items a business owns and expects to use with in a year, examples include inventory, bank balance, trade receivables and cash in hand
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Liabilities
A debt, something owed by a business
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Non current-liabilities
money borrowed over long periods (mortgage, debenture)
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Current liabilities
Short-term debts (overdraft, trade payables
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Other cards in this set

Card 2

Front

The money required to start a new business (office space, factories.

Back

Start-up -capital

Card 3

Front

The money needed in order for a business to expand and grow number of outputs

Back

Preview of the back of card 3

Card 4

Front

The money used for staff wages, purchase stock etc.

Back

Preview of the back of card 4

Card 5

Front

Money obtained within the business, this includes retained profit, owners funds, working capital, sales of assets

Back

Preview of the back of card 5
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