Finance Flashcards
(14 cards)
What is retained profit
Portion of business profits that are retained and invested
Overdraft
Borrow up to a certain amount, short team finance.
What is trade credit
Delaying payments to suppliers to extend payment period
Depreciation
Asset loses value over time
Break even calculation
Fixed cost - (sales price per unit - variable costs)
Calculate payback period
Initial investment/ annual net cash flow
Average rate of return
(Average annual profit/ initial investment) x 100
What is gearing
Proportion of a company’s operations that’s are funded by debt
Calculate debt to equity ratio
Total debt/ total equity
Gearing ratio
Non current liabilities ( debt)/ capital employed x100
Interest cover ratio
Earnings before interest and taxes/ interest expense
Debtor days
Trade receivables / revenue x 365
Creditor days
Trade payables/ purchases x365
Stock turnover
Cost of stock/ average stock
