Business Topic 1.3 Flashcards
Key terms (35 cards)
Aims
a general statement of where you’re heading, for example ‘to get to university’.
Market share
he percentage of a market held by one company or brand.
Objectives
a clear, measurable goal, so success or failure is clear to see.
SMART objectives
targets that are specific,
measurable, achievable, realistic and time-bound.
Survival
keeping the business going, which ultimately depends on determination and cash.
Fixed costs
costs that don’t vary just because output varies, for example rent.
Interest
the charges made by banks for the cash they have lent to a business, for example six per cent per year.
Profit
the difference between revenue and total costs; if the figure is negative the business is making a loss.
Revenue
the total value of the sales made within a set period of time, such as a month.
Total costs
all the costs for a set period of time, such as a month.
Variable costs
costs that vary as output varies, such as raw materials.
Sales revenue formula
price × quantity sold
Total costs formula
variable costs + fixed costs
Profit formula
total revenue – total costs
Break-even
the level of sales at which total costs are equal to total revenue. At this point the business is making neither a profit nor a loss.
Break-even chart
a graph showing a company’s revenue and total costs at all possible levels of output.
Margin of safety
the amount by which demand can fall before the business starts making losses.
Break-even output formula
fixed costs/(price – variable costs)
Margin of safety
sales – break-even output
Cash
the money the firm holds in notes and coins, and in its bank accounts.
Cash flow
the movement of money into and out of the firm’s bank account.
Insolvency
when a business lacks the cash to pay its debts.
Overdraft
the amount of the agreed overdraft facility that the business uses.
Overdraft facility
an agreed maximum level of
overdraft
