Unit 5 - Decision making to improve financial performance Flashcards Preview

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Flashcards in Unit 5 - Decision making to improve financial performance Deck (17):
1

Financial objective

A target set for the finance function

2

Cash flow

The movement of cash into and out of a business over time

3

Capital expenditure

Spending undertaken by businesses to purchase non-current assets

4

Capital structure

The way in which a business has raised the capital it requires to purchase its assets

5

Budgets

Financial plans for cost/revenues for a future period of time-based on a firms objectives

6

Variance analysis

The process of investigating any differences between forecast data and actual figures

7

Break-even output

The level of output at which costs exactly equal revenue

8

Contribution

The difference between revenue and variable costs

9

Margin of safety

The difference between the actual output and the break-even output of a business

10

Trade credit

The period of time given by suppliers before customers have to pay for products

11

Bank loan

An amount of money provided to a business for a stated purpose in return for a payment in form of interest charges

12

Overdraft

Exists when a business is allowed to spend more than it holds in its current bank account up to an agreed limit

13

Venture capital

Funds advanced to businesses thought to be relatively high risk in the form of share and loan capital

14

Share capital

Finance invested into a company as a result of the sale of shares in the business

15

Mortgage

Long-term loans, repaid over periods of time up to 50 years and used to purchase property

16

Debentures

Loans with fixed interest rates that are long-term and may not even have a repayment date

17

Crowdfunding

Practice of funding a project or venture by raising many small amounts of money from large number of people, typically via the internet