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Unit 3 Keywords Flashcards

(80 cards)

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1
Q

Capital expenditure

A

Refers to Business spending on fixed assets or capital equipment of a business

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2
Q

Finance

A

Refers to the various available money that an organisation has to fund business activities

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3
Q

Revenue expenditure

A

Refers to business spending in its everyday and regular operations

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4
Q

Role of finance

A

Refers to the purpose of finance, the reason for needing it. Roles can be classed as revenue or capital expenditure

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5
Q

Business angel

A

Wealthy, successful private individuals who risky their own money in a business venture that has high growth potential

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6
Q

Crowdfunding

A

Raising finance for a business project/venture by getting small amounts of money from many people, often through online platforms

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7
Q

External sources of finance

A

Finance coming from outside organisation, often help from 3rd party like banks, business angels, venture capitalists or gov

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8
Q

Initial public offering (IPO)

A

Finance raised by a public limited company when sells shares for first time on stock exchange

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9
Q

Internal sources of finance

A

Finance from within organisation, from its own resources and assets

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10
Q

Leasing

A

Allows business to have access to non-current assets, though without high costs or capital expenditure

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11
Q

Loan capital

A

AKA debt capital, borrowed funds from financial lenders like commercial banks

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12
Q

Long term finance

A

Sources of finance of more than 5 years, for the purchase of ling term fixed assets or to fund business growth in overseas market

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13
Q

Micro finance

A

External source of finance provided by financier who support small business entrepreneurs, especially those struggling to secure loans

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14
Q

Overdraft

A

short-term borrowing facility, usually from banks, that allows customers to spend more money than you have in your account, up to an agreed limi

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15
Q

Retained profit

A

This is the surplus funds reinvested back in the business, instead of it being distributed to the owners

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16
Q

Revenue expenditure

A

Business spending in everyday regular operations, like wages, bills, raw materials etc

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17
Q

Sales and leaseback

A

When a business divests it’s tangible non-current assets and subsequently enters a lease agreement to regain access to assets

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18
Q

Share capital

A

AKA equity capital, finance raised through the issuing of shares via the stock exchange

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19
Q

Share issue

A

Involves a public limited company selling additional shares in order to raise finance

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20
Q

Short term finance

A

Sources of finance needed for day to day running like revenue expenditure, often repayable in 12 months

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21
Q

Stock exchange / stock market

A

Where individuals and business can buy and sell share in public limited company companies

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22
Q

Trade credit

A

Financial service that allows a business customer to purchase or obtain goods and services but pay for them later on

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23
Q

Average costs

A

This is the cost per unit of output

AC = TC / Q

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24
Q

Average revenue

A

Amount the business revives from customer per unit of good/service sold

AR = TR / Q = P

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25
26
Direct costs
Costs clearly associated with the output or sale of a good, service or business operations like raw materials, labour (wages), packaging materials
27
Fixed costs
Costs that don’t change with out out level like rent, salaries and insurance
28
Indirect costs
AKA overhead costs, they not easily identifiable with the sale or output of a specific good, service of business operation
29
Revenue
Income recievd by a business for sale of goods and services
30
Revenue stream
The different revenue sources, like from sponsorship deals, sale of merchandise, membership fees
31
Total costs
The aggregate amount of money spent on output of a business TC = TFC + TVC
32
Total revenue
Sum of income business revives from trading activities TR = P x Q
33
Variable costs
Costs that change with output level, they rise when output or sales increase like raw materials and packaging costs
34
Balance sheet
AKA statement of financial position, set of financial accounts showing the value of firms assets, liabilities and owners investments at a certain point in time
35
Copyrights
Intangible assets that give registered owner legal rights to creative pieces of work, like work of authors, musicians, conductors, directors etc
36
Cost of sales
The direct costs of production, raw materials costs for example and direct labour
37
Current assets
Short terms assets belonging to organisation, which will be in business for up to 1 year, like cash, debtors and stock
38
Current liabilities
Short term debts or a business, which need to be paid in 12 months of balance sheet date. Like overdrafts, trade creditors
39
Equity
Value of the owners stake in the business, what it’s worth at the time of reporting balance sheet date
40
Dividends
Payment from a companies profit (after interest and tax) paid to shareholders of company. Depends on number of shares
41
Finished goods
Final produce of a business
42
Fixed assets
Long term assets used repeatedly though not interned for resale in 12 months like property and machinery
43
Gross profit
Profit from a firms everyday trading activity Sales revenue - cost of sales
44
Intangible
Non physical, can’t touch it
45
Liabilities
Debts of business
46
Net asset
Overall value of organisations assets after all liabilities are deducted. Total assets - Current liabilities - non current liabilities
47
Fixed assets
AKA non current assets, refers to long term assets of Organisation with monetary value but not intended for resale in next 12 months of balance sheet date
48
Non current liabilitie
Debt that will take longer than a year
49
Overdrafts
Allows customer to take out more money than is available in the account temporarily
50
Profit and loss account
AKA income statement. Shows profit after all productions costs are subtracted from organisation revenue each year
51
Working capital
Money available for day to day running of business Current assets - current liabilities
52
Acid test ratio
Measure firms ability to pay short term debts without having to sell stock
53
Capital employed
The value of funds used to operate the business and generate a fincial return for the organisation. The sum of non current assets and equity finance
54
Current ratio
Short term liquidity ratio used to calculate ability of firm to meet short term debts
55
Gross profit margin
Measures organisation gross profit expressed as a percentage of sales revenue. Indicated how well business manages direct costs of production
56
Return on capital employed
Profitability ration measuring firms efficiency and profitability in relation to size
57
Cash flow
The movement of a firms cash inflows (cash from sale of goods and services) and cash outflows (used to pay costs of running business)
58
Cash
Money business has in hand, easily accessible
59
Cash flow forecasting
Quantitive technique used to predict how cash is likely to flow in and out of the business for a particular period of time
60
Cash inflow
Money coming into firm from sales revenue and other finance sources like crowdfunding
61
Crowdfunding
A way of easing money to finance business and project
62
Cash outflow
Money going in and out of business to pay costs, like purchase of raw material or payment of wages
63
Closing balance
Found in cash flow forecast, refers to value of cash held by firm at the end of a trading period
64
Collateral
Refers to the financial guarantee using a firms fixed assets to secure loan capital
65
Debtors
Category of current assets, individuals or business that is money to organisation as they have bought products on trade credit, is usually need to pay in 30-60 days
66
Net cash flow
Numerical difference between an organisations total cash inflows and total cash outflows per time period Cash inflows - Cash outflows
67
Net current assets
AKA Working capital, on balance sheet to show liquidity position of business, though formula: Current assets - current liabilities
68
Opening balance
In cash flow forecast, value of cash held by business at start of trading period
69
Overdrafts
Financial service from banks allowing customer to take more than available from their bank account temporarily
70
Profit
Value of sales revenue after all costs accounted
71
Sales revenue
Value of goods and services sold to customers
72
Accounting rate of return (ARR)
Average rate of return, method of investment appraisal calculates average annual profit of an investment project shown as percentage of the amount invested
73
Cumulative net cash flow
Sum of an investment projects net cash flow forecast certain year plus net cash flow of all pevious years
74
Investment
Capital expenditure with intention of financial return on this spending at some point in future
75
Investment appraisal
Quantifying financial risks of an investment decision, to establish wether the expenditure can be justified from financial view
76
Payback period (PBP)
Investment appraisal method that considers the time taken for amount of money invested in a project to be repaid using proceeds generated from investment
77
Principal
The capital outlay or original amount spent on investment project
78
Qualitive investment appraisal
Method is investment appraisal used to determine if a project is work the investment by using non numerical techniques, like if it aligns with firms mission
79
Quantitative investment appraisal
Method of investment appraisal used to dyermine if investment project is worth it based on financial analysis like ARR, PBP etc
80
Capital expenditure
Firms spending on the purchase or acquisition of fixed assets, like machinery, buildings or tools

Business (9 decks)

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