Sources of Finance Flashcards
revision (23 cards)
What is a main source of finance?
Possible answers are:
Bank loan
Overdraft
Trade credit
Retained profit
Sales of assets
Owners capital
New partners capital
Share issue
Crowdfunding
What characteristics does an entrepreneur have ?
Risk taker
Creative
Motivated
Problem solver
Leadership
Management skills
Good with people
negotiation
What three things Define an entrepreneur?
1 spots an opportunity or gap in the market
2 prepared to take a risk
3 invests in the business
What is employment law?
The laws a business has to abide by when hiring
What is employment law?
The laws a business has to abide by when hiring
What is a balance sheet?
A snapshot in time of what the business owns and what it owes
What is an asset?
A thing the business owns
What is a liability?
A thing the business owes
What is a business plan?
A business plan is a document which sets out the future plans of the business it is how an entrepreneur can explain how they will turn there idea into a successful business
What is the gross profit formula
GP=SR-VC
Gross profit=sales revenue-variable cost
What is the gross profit formula
GP=SR-VC
Gross profit=sales revenue-variable cost
What is the formula for total revenue
TR=PxQ
Total revenue= price x quantity
What is the formula for total revenue
TR=PxQ
Total revenue= price x quantity
What is the formula for net profit margin
NPM= NP/SR x 100
Net profit/ sales revenue x100
What is break even
The point where a business makes neither a loss nor profit
How do you work out the ARR (average rate of return)
- Total income- cost of investment
- Average annual profit = profit/ years
- ARR= annual average profit/ cost of investment x 100
What sentence starters should you use in a four mark question
TMMT. this might mean that
TCLT. this could lead to
HIDO. However this depends on
What’s the margin of safety formula
Current output - breakeven point
What is the margin of safety
The difference between the actual units of output and breakeven point
What is the formula for net profit
NP=SR-TC
Net profit=sales revenue-total costs
what are the jobs of the finance function
strategy and risk
funding
compliance
accounting
management and control
what is a loan
when a business borrows a sum of money from a bank or other lender
what is an overdraft
when the bank allows a business to spend more money than there is in there current account
