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15 Cards in this Set

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Sources of finance: Mortgage
A long term loan for purchasing a building.
Sources of finance: Bank Loan
Finance provided by the bank that will be paid back over a set period.
Sources of finance: Overdraft
A flexible arrangement that allows a business to spend more money than it has in its bank account, as and when it needs the finance.
Sources of finance: Borrowing from friends and family
A business can borrow money from friends or relatives but the may have to pay it back. However, may not have interest.
Sources of finance: Business grant
bounty, contribution, gift or subsidy given by the government for a particular reason.
Sources and types of advice available for small businesses
Businesses can get financial advice from banks, government organisations and charitable organisations.
Revenue
The amount of money you get from selling your goods or services.
Costs
Things you have to pay for to make your business run. E.g. stock, rent, advertising, fuel, wages.
Cash Flow
The movement of money in and out of the business.
Cash flow forecasts
Predicting how much money is moving in and out of the business.
Profit
How much money you make after selling your goods/services minus the costs.
Calculating profit and loss
Revenue - Costs = PROFIT
...in other words...
PROFIT(or loss) = Revenue - Costs
Calculating Revenue
Selling Price x Units sold per year = REVENUE
Importance of cash flow statements
Businesses can use a cash flow forecasts to predict what money is coming in/out of the business. The business can tell whether or not they need a loan etc...
Solutions to cash flow problems
-Increase revenue (by increasing price you may decrease demand)
-borrow money
-reduce costs (eg. stock levels)
-delay paying bills
-sell existing assets (buildings)