Finance

pamelamossman
Flashcards by pamelamossman, updated more than 1 year ago
pamelamossman
Created by pamelamossman over 6 years ago
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Start up costs Costs a business will incur when it firsts sets up e.g. buying equipment
Ongoing costs Costs of running the business e.g. electricity
Sales Revenue The income generated from sales of goods or services. Price x quantity
Fixed costs Any costs that do not vary directly with the level of output e.g. rent
Variable costs Costs that do vary directly with the level of output e.g. raw materials
Total variable costs All the variable costs of producing a specific output level. Variable costs per unit x number of units sold
Total costs This is the sum of fixed and variable costs.
Profit The difference that arises when a firm’s sales revenue exceeds its total costs. Total Revenue – Total costs. Or Total contribution - overheads
Break even The point at which total revenue = total costs. The business does not make a profit, or a loss. Formula = Fixed Costs/Selling Price – Variable cost
Cash flow forecast A detailed estimate of when values of money are expected to flow in and out of the business.
Net cash flow Difference between total inflows and total outflows
Profit and Loss Account A financial statement used to show how a business has performed over a period of time
Cost of sales The cost of producing a product
Gross profit The money made from sales after the cost of sales has been deducted FORMULA: Sales – Cost of Sales
Net profit The money made from gross profit once the expenses have been deducted FORMULA: Gross Profit - Expenses
Balance sheet Financial statement used to show the financial position (the value) of a business at a point in time
Fixed assets Something a business owns, the value of which last more than one year e.g. machinery, equipment
Current assets Something a business owns, the value of which will change within one year e.g. cash, bank, debtors
Current liabilities Something the business owes, the value of which will change within one year e.g. suppliers
Long term liabilities Something the business owes, the value of which lasts more than one year e.g. bank loan
Working capital Current assets – current liabilities
Net assets Fixed assets plus working capital
Liquidity The ability of a firm to meet its short term debts
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