Unit 3.3: Effective Financial Management

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GCSE Business Studies (Unit 3) Flashcards on Unit 3.3: Effective Financial Management, created by nk_ on 10/20/2013.

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Question Answer
Overdraft Permission to take more form a current account than is deposited.
Credit Terms When buying goods or services and paying for them after they have been received, this is the amount that has to be paid back and by when.
Destocking This is an attempt to improve cash flow by selling stock at a reduced rate. Having cash tied up in stock is costly.
Fixed Costs Costs which remain constant even if production or sales increases e.g.rent
Variable Costs Costs which alter if sales or production increases e.g. manufacturing costs.
EU Grant A subsidy available to new businesses which set up in areas of regeneration.
Just In Time (JIT) A system designed to reduce cash tied up in stock - firms buy raw material only when they need them and produce goods to order.
Profit The amount of money a business is left which after paying all of its costs. Revenue - Cost = Profit
Revenue The amount of money earned by a firm from selling its product/service. Price x Quantity = Revenue
Break Even Point The level of sales at which total cost is the same as total revenue.
Break Even Chart A graph which shows the total costs/total revenue and the breakeven point.
Margin of Safety The amount sales can fall before the firm's profit is wiped out.
External Sources of Finances Sources of finance from outside the company e.g.bank loans
Internal Sources of Finance Sources of finance the company already has e.g. selling assets.
Flotation When a firm offers its shares for sale to the public for the first time on the stock exchange.
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