bs 5 Flashcards
(24 cards)
What is Revenue (Sales Turnover)?
The total amount of money a business earns from selling goods or services. Formula: Revenue = Price × Quantity Sold
Shows how much income is generated; useful for calculating profit.
What is Cost?
The money spent to produce goods or services.
Helps measure how much is spent to make products.
What is Fixed Cost?
Costs that do not change with the level of output (e.g. rent, salaries).
Easy to predict and plan for.
What is Variable Cost?
Costs that do change depending on output (e.g. materials, electricity).
Only paid when producing something; flexible.
What is Total Cost?
All the money spent: Fixed Costs + Variable Costs
Gives a full picture of business spending.
What is Profit?
The money a business makes: Profit = Revenue - Total Costs
Shows success and how much money is earned.
What is Break-even Point?
The level of sales where total revenue = total costs, so the business makes zero profit, zero loss.
Helps businesses set sales targets; avoids loss.
What is Margin of Safety?
The amount by which sales can fall before the business starts making a loss.
Helps manage risk.
What is Cash Flow?
The movement of cash in and out of a business.
Helps track if the business has enough money to pay bills.
What is Cash Flow Forecast?
A prediction of future cash inflows and outflows.
Helps plan and prepare for cash shortages.
What is Working Capital?
Money available for daily operations: Current Assets - Current Liabilities
Shows if the business can pay short-term debts.
What is Income Statement?
A financial document showing revenue, costs, and profit/loss over a period of time.
Helps measure performance; used by investors.
What is Balance Sheet?
A financial statement showing a business’s assets, liabilities, and owner’s equity at a specific point in time.
Shows what the business owns and owes.
What is Gross Profit?
Revenue - Cost of Goods Sold (COGS)
Shows profit from core activities.
What is Net Profit?
Gross Profit - All other expenses (rent, wages, etc.)
Shows overall profitability.
What is Liquidity?
How easily a business can pay its short-term debts.
Helps assess financial health.
What is Capital?
The money invested into the business by owners or shareholders.
Needed to start and grow a business.
What is Internal Finance?
Money raised from inside the business (e.g. retained profit, selling assets).
No repayment or interest needed.
What is External Finance?
Money raised from outside the business (e.g. loans, new shareholders).
Larger amounts can be raised.
What is Retained Profit?
Profit that is kept in the business instead of being paid out to owners/shareholders.
No interest or repayments; shows strong financial health.
What is Overdraft?
A bank allows a business to take out more money than it has in its account (short-term loan).
Quick way to cover short-term cash shortages.
What is Loan?
Borrowed money that must be repaid with interest.
Useful for long-term purchases or investment.
What is Share Capital?
Money raised by selling shares of the company to investors (only for limited companies).
No repayment; more capital available.
What is Crowdfunding?
Raising small amounts of money from a large number of people (usually online).
Easy to reach many people; builds community interest.
