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Business theme 2 > Theme 2 key terms > Flashcards

Theme 2 key terms Flashcards

(77 cards)

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1
Q

Fixed costs

A

Those that do not change as the number of sales change e.g. rent

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2
Q

Variable costs

A

Those that change in line with the amount of business e.g. cost of buying raw materials

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3
Q

Working capital

A

The finance available for the day to day running of the business

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4
Q

Angel investors

A

Investors who back a business before it opens its doors, taking full equity risk

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5
Q

Collateral

A

An asset used as security for a loan. It can be sold by a lender if the borrower fails to pay back a loan

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6
Q

Crowd funding

A

Obtaining external finance from many individuals, small investments usually web based

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7
Q

Public limited company(PLC)

A

A company with limited liability and shares, which are available to the public. Its shares can be quoted on the stock market

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8
Q

Seedcorn capital

A

The early stage(sowing a seed) finance that might come from angel investors

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9
Q

Share capital

A

Business finance that has no guarantee of repayment or annual income, but gains a share of control of the business and its potential profits

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10
Q

Stock market

A

A market for buying and selling company shares. it supervises the issuing of shares by companies. It is also a second hand market for stocks and shares

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11
Q

Venture capital

A

High risk capital invested in a combination of loans and shares, usually in a small, dynamic business

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12
Q

Bankrupt

A

When an individual is unable to meet personal liabilities, some of all of which can be a consequence of business activities

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13
Q

Creditors

A

Those owed money by a business

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14
Q

Limited liability

A

Owners are not liable, they can lose no more than the sum they invested

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15
Q

Sole trader

A

A one person business with unlimited liability

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16
Q

Unlimited liability

A

Owners are liable for any debts incurred by the business, even if it requires them to sell all their assets and possessions and become personally bankrupt

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17
Q

Best case

A

An optimistic estimate of the best possible outcome

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18
Q

Business plan

A

A document setting out a business idea and showing how it can be financed, marketed and put into practice

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19
Q

Cash flow forecast

A

Estimating future monthly inflows and outflows, to find out the net cash flow

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20
Q

Just-In-Time

A

Ordering stock so that it arrives just before it is needed

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21
Q

Overdraft

A

Short term borrowing from a bank. The business only borrows as much as it needs to cover its daily cash shortfall

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22
Q

Worst case

A

A pessimistic estimate assuming the worst possible outcome

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23
Q

Contingency plans

A

Plans held in reserve in case things go wrong

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24
Q

Real incomes

A

Changes in household incomes after allowing for changes in prices

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25
Sales forecast
A method of predicting future sales using statistical methods
26
Trend
The general path that a series of values follows over time, disregarding variations or random fluctuations
27
Piece rate labour
Paying workers per item they make, that is without regular pay
28
Sales revenue
The number of units sold in a time period multiplied by the average selling price of those units
29
Sales volume
The number of units sold in a time period
30
Total costs
All the costs of producing a specific output level
31
Total variable costs
All the variable costs of producing a specific level of output- that is variable costs per unit multiplied by the number of units sold
32
Variable costs
Those that change in line with the amount of business
33
Break even chart
A line graph showing total revenues and total costs at all possible levels of output or demand from zero to maximum capacity
34
Contribution
This is the total revenue less variable costs. The calculation of contribution is useful for business that are responsible for a range of products
35
Margin of safety
The amount by which current output exceeds the level of output necessary to break even
36
Adverse variance
A difference between budgeted and actual figures that is damaging to a firms profit
37
Criteria
Yardsticks against which success or the lack of it can be measured
38
Delegation
Passing authority down the hierarchy to allow junior employees some decision making power
39
Expenditure budget
Setting a maximum figure on what department or manager can spend over a period of time, this controls costs
40
Favourable variance
A difference between between budgeted and actual figures that boost a firms profit
41
Income budget
Setting a minimum figure for the revenue to be generated by a product, a department or a manager.
42
Zero budgeting
Setting all future budgets at £0, to force managers to have to justify the spending levels they say they need in the future
43
Corporation tax
A levy of the incomes of companies i.e. the percentage you pay a percentage of your tax pre profit
44
Dividends
Annual payments made to shareholders
45
Fixed overheads
The indirects costs that have to be paid however the business is performing e.g. rent
46
Contingency finance
Planning for the unexpected by either keeping a cash cushion in the firms current account or keeping an overdraft facility little used
47
Credit period
The length of time a supplier allows a buyer to wait before paying
48
Liquidation
Closing the business down by selling off all the assets , paying debts and returning what is left to the shareholders
49
Liquidity
The ability of a business to pay its bills on time, which all depends upon having enough cash in the bank
50
Working capital cycle
How long it takes for a complete cycle from cash out(buying stocks) to cash back in from a customer payment. it could vary from one day to one year
51
Administration
When the directors of a business feel forced by the threat of insolvency to hand over management control to an administrator(usually an accountant), who may try to sell the business or perhaps close it down and sell off the assets
52
Business model
The underlying plan of how the business is going to make profit in the long term
53
Enterprise resource planning
Planning that log all of a firms costs, working methods and resources within a piece of software; this provides a model of the business that can be used to answer questions
54
Supply chain
The whole path from suppliers of raw materials through production and storage onto customer delivery
55
Barrier to entry
Factors that make it hard for new firms to break into an existing market
56
GDP
Gross domestic product is the value of all the goods and services produced in a country in a year
57
Job enrichment
Giving people the opportunity to use their ability
58
Lean production
Focusing on minimising wastage of resources throughout the supply process
59
Downtime
Any period when machinery is not being used in production; some downtime is necessary for maintenance but too much may suggest incompetence
60
Excess capacity
When there is more capacity than justified by current demand
61
Rationalisation
Reorganising in order to increase efficiency. This often implies cutting capacity to increase the percentage utilisation
62
Sub contracting
Where another business is used to perform or supply certain aspects of a firms operations
63
Buffer stock
The desired minimum stock level held by a firm just in case something goes wrong
64
Competitive advantage
A feature that gives one business an edge over its rivals
65
Competitiveness
The extent to which a firm can stand up to or beat its rivals
66
Opportunity cost
The cost of missing out on the next best alternative when making a decision
67
Stockholding cost
The overheads resulting from the stock levels held by a firm
68
Right first time
Avoiding mistakes and therefore achieving high quality with no wastage of time or materials
69
Trade off
Accepting less of one thing achieve more of another
70
Zero defects
Eliminating quality defects by getting things right the first time
71
Consumer demand
The level of spending by consumers in general
72
Discretionary income
A persons income after deducting tax and fixed payments such as rent and utility bills
73
Economic climate
The atmosphere surrounding the economy
74
Real
Changes in money excluding the distorting effects of change in prices. so a fall in real wages may mean that wages are unchanged but prices have risen
75
Recession
Two or more quarters of negative growth
76
Collusion
When managers from different firms get together to discuss ways to work together to restrict supply/raise prices
77
Non-price competition
All competitive strategies other than price such as branding product design and technological innovation

Business theme 2 (12 decks)

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