Keywords Flashcards
(22 cards)
Return on investment
A measure of the profitability of an investment, calculated as the ratio of net profit generated by the investment to the initial investment cost.
Gross profit
The difference between revenue and the cost of goods sold, representing the profit earned from primary business activities before deducting other expenses.
Operating profit
The profit earned from a company’s core business operations after deducting operating expenses from gross profit.
Profit for the year
The net income or profit earned by a company over a specific accounting period, typically calculated after deducting all expenses, taxes and dividends.
Adverse variance
A difference between actual performance and budgeted or expected performance that results in a negative impact on a company’s financial results.
Favourable variance
A difference between actual performance and budgeted or expected performance that results in a positive impact on a company’s financial result.
Break even output
The level of output at which total revenue equals total costs, resulting in neither profit or loss.
Margin of safety
The difference between actual sales and the break even point, representing the amount by which sales can drop before a company incurs losses.
Contribution per unit
The amount of revenue remaining after deducting variable cost per unit from selling price, representing the contribution of each unit sold towards covering fixed costs.
Total contribution
The total amount of revenue remaining after deducting variable costs from sales revenue, available to cover fixed costs and contribute to profit.
Payables
Amount owed by a business to its suppliers or creditors for goods or services purchased on credit.
Receivables
Amounts owed by a business by its customers or debtors for goods or services provided on credit.
Profit from operations
The profit earned from a company’s core business activities before deducting interest and taxes.
Break even analysis
A financial technique used to determine the level of sales or output needed to cover total costs and break even, helping businesses make informed decisions.
Debt factoring
A financing arrangement where a business sells its accounts receivable to a third party at a discount to obtain immediate cash.
Overdrafts
Short term loans provided by banks that allow businesses to withdraw more money from their bank accounts than they have available, up to an agreed limit.
Retained profits
The portion of a company’s net income that is retained and reinvested in the business rather than distributed to shareholders as dividends.
Share capital
The total value of funds raised by a company through the issuance of shares to shareholders, representing ownership in the company.
Loans
Funds borrowed by a company from external sources, typically financial institutions or lenders, which must be repaid with interest over a specified period.
Venture capital
Equity financing provided to early stage, high potential startups or small businesses by investors in exchange for ownership stages, with the expectation of high returns.
Crowdfunding
A method of raising capital for a project or venture by soliciting small contributions from a large number of individuals, often through online platforms.
Cash flow
The movement of money in and out of a business, reflecting it liquidity and ability to meet financial obligations.
