💚13 Finance Flashcards
Whats budgeting
Managing money properly to ensure you have enough cash abailavle to pay bills
Define cash flow forecast
Written plan in which a business sets out its expected future receipts and payments over a period.
Helps it to estimate if itll have surplus or deficit in future
Can then plan out actions to deal with the estimate
Name some ways a Business can Receive cash
Selling goods to customers
Cash received from customers sold to on credit
Income earned on investments (interest etc)
Rent from tenants
Name some ways a Business can Spend Cash
Buy stock
Paying suppliers on credit
Buy fixed assets
Paid out in dividends
Pay expenses (wages ins electricity)
Paid to revenue (tax)
How to deal with an expected future business deficit
Increase Cash Receipts
-credit control methods, discount if they
pay quicker
-sell some investments
-have a sale,encourage spending
Reduce Cash Payments
-spread big payments out (HP)
-make cutbacks (wage cuts,cheaper
services)
-reduce amnt paid out in dividends, offer
free shares in business instead
Why does a business prepare a Cash Flow Forecast??
Avoid Cash Deficits
-Gives time to plan and make changes
Improve Financial Control
-Compare predictions and actual
receipts and payments, see if on track
Raise Finance
-Show investors it wont run out of cash,
wont go bankrupt, convinces investors
to provide w money.
Increase Profits
-Know when theyll have excess cash and can plan to invest it and earn interest
What is a HOUSEHOLD BUDGET
Written plan in which a family sets out its expected future cash receipts and payments over a period.
What categories can household expenditure fall under
Fixed-Monthly bills,amnt stays the same
Irregular-Bills but amnt changes
Discretionary-Optional spending
Ways household can receive money
Wages/Jobseekers allowance
Child Benefit
Interest on savings
Ways household can spend money
Household Expenses-food, mortgage etc
Buy Fixed Assets-Tv, car, fridge
Paying Local Authority-Bin charges, motor tax etc.
How does a Household deal with a predicted deficit
Increase Receipts
-Overtime, extra part time job
-Rent out a spare room
Reduce Payments
-Spread out payments, hire purchase
-Make cutbacks
Why does a household prepare a budget??
Avoid Cash Deficits
-Can plan to make changes
Manage Money Better
-Highlights areas of overspending
Raise Finance
-Show bank to convince for a loan
Maximise Investments
-Can plan to invest any cash surplus
What is a spreadsheet
Computer software that is used to do basic maths calculations.
Can be used to draft CFF
Advantages of a spreadsheet
Performs basic maths calculations accurately and quickly saving time and money
Allows for “what if?” analysis, can know how vulnerable they are to changes
Name HOUSEHOLD SHORT TERM sources of finance
Bank Overdraft
Accrued Expenses
Credit Card
Name BUSINESS SHORT TERM sources of finance
Bank Overdraft
Accrued Expenses
Credit Card
Trade Credit
Factoring
Name HOUSEHOLD MEDIUM TERM FINANCE
Hire purchase
Leasing
Personal loan
Name BuSineSs MEDIUM TERM FINANCE
Hire purchase
Leasing
Medium term loan
Name HOUSEHOLD LONG TERM finnance
Mortgage
Savings
NameBuSiNeSs LONG TERM finnance
Debentures
Retained Earnings
Grants
Equity Capital
Tracker Mortgage
How long is considered short term
Under a year
How long is considered medium term
1-5 years
How long is considered Long term
5+ years
What is a bank overdraft??
ST H+B
Source of finance where the bank allows u to pay for things even tho you don’t have enough money in your current acc.
Pay back sometime during the year with interest
Stock,groceries