Unit 1 Finance

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State 4 ways a small business uses finance?
Carry out research. Promotion and advertisement. For growth and expansion. To pay staff/ employees wages.
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Define the term fixed costs with examples.
Costs that do not move with turn overs. This could be rent.
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State the differnece between running and start-up costs?
Start up costs is the money needed at the begin when the business is in the process of starting up. Running costs are costs that the business has to pay out when contionously running the business.
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What is the name given to "shares in a company"?
Equity.
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State feautures of perosnal savings? (inc fam and friends)
They are availiabe instantly and no interest needs to be paid. However it could be quite a small amount and there coule unecxpected ask for repayments.
5 of 20
State features of bank loans?
Large amounts can be borrowed and the payment is spread over a period of time. However interest is asked for which could be expensive and start up companies may not fit in the right criteria to get a loan.
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State features of an overdraft?
They are good for unexpected bills and availiable instantly. Quite flexible as the amount varies from month to month. However in the short term there are high interest rates and the amount has to be paid every month instantly.
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What is a grant anf what are the pros and cons of one?
A one off payment that usually costs the firm nothing and does not need to be repaid, however the firm has to comply with regulations and many businesses do not qualify for them.
8 of 20
When answering a 9 marker on sources of finance what do you need to consider?
How much money is needed? How long it is needed for? How much control the owener has?
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What is profit?
It is the money left after costs have been deducted from revenue.
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How do you work out profit?
Revenue - costs
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What is revenue?
The money a business receives from selling goods or services.
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How do you work out revenue?
Quantity of products sold x selling price
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How do you work out total costs?
Variable costs + Fixed costs
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What do ownders need to consider when reducing price?
Profit may decrease if prices decrease. ownders need to look at their competition.
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What is cash flow?
The movement of money coming in and out of a business.
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Give examples of cash inflows and cash outflows.
Revenue [receipts}, personal savings. Salaries and wages, interest repayments, equipment purchase.
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How do you work out net cash flow?
cash inflow - cash outlow
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What is the difference between a cash flow forecast and statement?
Forecast is a predicition of the net cash flow over a period of time, whereas a cash flow statement shows the cash inflows and outflows over a year.
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State some issues with cash flow?
You could have low profit or losses. Too much stock wastage. Customers have too much credit.
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Other cards in this set

Card 2

Front

Define the term fixed costs with examples.

Back

Costs that do not move with turn overs. This could be rent.

Card 3

Front

State the differnece between running and start-up costs?

Back

Preview of the front of card 3

Card 4

Front

What is the name given to "shares in a company"?

Back

Preview of the front of card 4

Card 5

Front

State feautures of perosnal savings? (inc fam and friends)

Back

Preview of the front of card 5
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