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