Finance definitions Flashcards Preview

BUSINESS - Unit 5: Decision making to improve financial performance > Finance definitions > Flashcards

Flashcards in Finance definitions Deck (10)
Loading flashcards...
1

define profit & formula

revenue - expenditure
amount of money the business has earnt, once costs have been deducted

2

what is cash flow?

timings of cash flowing in (inflows) and cash flowing out (outflows) of the business

3

define revenue & formula

amount of money made from sales
quantity sold x price per unit

4

define fixed costs

costs that do not later with output

5

define variable costs

costs that alter with output

6

define total costs & formula

all the expenditure of the business
fixed costs + variable costs

7

when does profit exist?

In financial records when total revenue is greater than total costs

8

what is cash?

the physical existence of money within the business

9

why can profitable businesses fail?

due to lack of cash

10

list why cash and profit may be different

- credit sales
- bad debts
- heavy stock holdings
- investment in fixed assets
- seasonality
- repayments of loans