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Flashcards in 3 business finance Deck (70)
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25.210. Instalment

One of a series of regular payment made until all the money owed has been repaid

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211. Short-term finance

Money borrowed for one year or less

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211. Long-term finance

Money borrowed for more than one year

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211. Capital

Finance provided by the owners of a business

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212. Internal finance

Finance generated by the business from its own means

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212. Retained profit

Profit held by a business rather than returning it to the owners and which may be used in the future

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212. Assets

Resources used or owned by a business, such as cash, stock, machinery tools and equipment

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213. External finance

Finance obtained from outside the business

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214. Bank overdraft

Agreement with a bank where a business spends more money than it has in its account (up to an agreed limit)

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214. Trade payables

Buying resources from suppliers, such as raw materials and components, and paying for them at a later date (sometimes called trade credit)

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214. Mortgage

Long-term loan secured with property

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214. Repossess

To take back cars, furniture or property from people who had arranged to pay for them over a long time, but cannot now continue to pay for them

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215. Debenture

Long-term security yielding a fixed rate of interest, issued by a company and secured against assets

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215. Hire purchase

Buying specific goods with a loan, often provided by a finance house

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215. Rights issue

Sale of new shares to existing shareholders at a discount

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215. Venture capitalists

Specialist investors (individuals or companies) who provide money for business purposes, often to new businesses

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216. Crowd funding

Where a large number of individuals (the crowd) invest in a business venture using an online platform and therefore avoiding using a bank

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Ch26. 218. Cash flow

Flow of money into and out of a business

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218. Liquid

Asset that is easily changed into cash

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219. Overheads

Money spent regularly on rent, insurance, electricity and other things that are needed to keep a business operating

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219. Insolvent

Inability to meet debts

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219. Cash flow forecast

Prediction of all expected receipts and expenses of a business over a future time period, which shows the expected cash balance at the end of each month

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219. Cash inflow

Flow of money into a business

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220. Cash outflow

Flow of money out of a business

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220. Drawings

Money taken out of the business by the owner for personal use

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221. Closing cash balance

Amount of cash that the business expects to have at the end of each month (takes into account the cash inflows and cash outflows)

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Ch27. 225. Costs

Expenses that must be met when setting up and running a business

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226. Fixed costs

Costs that do not vary with the level of output

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226. Variable costs

Costs that change when output levels change

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226. Total costs

Fixed costs and variable cost added together