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23 Cards in this Set
- Front
- Back
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Cashflow |
The flow of cash in and out of a business. |
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Increasing Inflows |
Where a business tries to increase the money coming in eg by improving quality or putting on offers. |
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Reducing Outflows |
Trying to reduce the amount of money flowing out of the business eg getting a cheaper supplier. |
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De-stocking |
Reducing the level of stocks held to help free up cash for other things. |
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Trade Credit |
When a supplier allows the customer a period of time to pay a bill. Buy now, pay later arrangement. |
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Credit terms (Trade credit) |
Ensure credit terms help your business. Try to pay supplier as late as possible and get customers to pay you as early as possible. This will help your cashflow, however small businesses may have no influence with large suppliers. |
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Profit |
What's left over from the revenue once all costs have been paid. |
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Revenues / Total Revenue |
The amount of money received from selling goods or services. |
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Break-even point |
The level of output where total revenues = total costs. No profit and no loss is made at this point. |
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Variable Costs |
Costs that change with the level of production such as raw materials and wages. |
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Fixed Costs |
Costs that do not change with the level of production such as rent and salaries. |
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Total Costs |
All the costs of a business, calculated by Fixed Costs + Variable Costs |
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Break-even Calculations |
Fixed Costs / Selling Price - Variable Costs
Think Father Christmas ... |
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Margin of Safety |
The amount of output between the actual level of output and the breakeven point. |
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Internal Finance |
Finance from within the business such as retained profit or sale of assets. |
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External Finance |
Finance obtained from outside the business such as bank loans and selling shares. |
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Retained profit |
Profit kept in the business and used to pay for future investments. |
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Share capital |
Companies can issue shares to help create finance in return for a share of equity. This does not have to be paid back but shareholders may want a share of profits and a say in decision making. |
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Share |
A part ownership in a business. |
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Dividends |
Money paid to shareholders as a reward for holding shares. |
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Overdraft |
Where a bank allows you to spend more than is actually in your account. |
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Sale of assets |
Selling off things within the business that are no longer used eg machinery. |
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Loan |
Where an amount of money is borrowed, usually from a bank. Easy to arrange, paid back in instalments with interest. |
