Mind Map by , created over 5 years ago

Business Management (Finance) Mind Map on Finance, created by shona.doyle10 on 02/15/2014.

Created by shona.doyle10 over 5 years ago
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1 Role of the Department
1.1 Record & maintain financial records
1.1.1 cash budgets
1.1.2 profit statements
1.2 Pay bills
1.2.1 electricity
1.2.2 insurance
1.3 Pay wages and salaries
2 Sources of Finance
2.1 Short Term
2.1.1 Overdraft
2.1.2 Trade Credit
2.1.3 Hire Purchase
2.1.4 loan
2.2 Long Term
2.2.1 Mortgage
2.2.2 Capital
2.2.3 Debenture
2.2.4 Loan
3 Cash Budgeting
3.1 Generating cash
3.1.1 selling fixed assets
3.1.2 taking additional partners
3.1.3 borrowing money
3.1.4 selling products at 'knock-down' prices
3.2 spending cash
3.2.1 wages/salaries
3.2.2 raw materials
3.2.3 training courses
4 Cash Flow
4.1 statements identify periods of shortages/excesses of cash
4.2 Must be enough cash or face liquidation
4.3 Problems
4.3.1 too many customers purchase on credit and don't pay within the agreed credit terms.
4.3.2 tying up cash in stock
4.3.3 owners taking too much drawings
4.3.4 low sales
4.3.5 purchase of capital items
4.4 Problems Resolved
4.4.1 discounts/promotions to increase sales
4.4.2 sell fixed assets
4.4.3 buy cheaper products
4.4.4 arrange credit with suppliers
5 Budgets
5.1 Why use them
5.1.1 show it it will have a surplus/defecit
5.1.2 focus activity on set targets
5.1.3 help managers co-ordinate activities
5.1.4 highlight problem areas
5.1.5 motivate staff
6 Break-Even Analysis
6.1 Sales Revenue - Total Expenditure = Profit
6.2 (Break-even) Total Costs (expenses) = Total Revenue
6.3 break-even worked out to find number of units of a product they have to sell before making a profit.
6.4 the business isn't making a profit or loss
7 Trading Accounts
7.1 calculates difference between amount of goods sold and those brought in.
7.2 Shows profit or loss before any expenses.
8 Profit & Loss Accounts
8.1 Show the Net Profit or Loss after expenses have been taken from the Gross profit
9 Annual Accounts
9.1 Must be provided by law
9.2 Include trading, profit & loss accounts
9.3 And balance sheets
9.4 Good guide to profitability, liquidity & efficiency
10 Technology
10.1 spreadsheets can be used to:
10.1.1 record cost info and calculate break-even
10.1.2 calculate profit
10.1.3 prepare cash budgets
10.1.4 make graphs to show income/expenditure
10.2 Role of technology in finance
10.2.1 Spreadsheets reduce calculating errors
10.2.2 accounting software so info is quickly processeed
10.2.3 tracking figures on daily/weekly/monthly basis
10.2.4 email to send info to the right people
10.2.5 spreadsheets to make charts etc
11 Glossary
11.1 Creditors
11.1.1 People who we buy things from on credit or others owed money. Shown as current liability in the balance sheet.
11.2 Debtors
11.2.1 When things are sold to someone on credit. Shown as current assets on the balance sheet.
11.3 Expenses
11.3.1 must be paid in the running of the business (rent,wages)
11.4 Fixed costs
11.4.1 do not change with output (factory rent, insurance)
11.5 Gross profit (loss)
11.5.1 difference between cost of goods sold & sales revenue
11.6 Hire purchase
11.6.1 spreading the payments over a period of time.
11.7 Net profit (loss)
11.7.1 expenses are less than gross profit = net profit. expenses greater than gross profit = net loss
11.8 Overheads
11.8.1 expenses that aren't materials/labour
11.9 Profit & loss account
11.9.1 after gross profit calculated any additional gains are added and then expenses deducted to find net profit/loss
11.10 Trading account
11.10.1 calculates the cost of goods sold & gross profit. Sales figures greater than cost of good sold = gross profit Sales figures less than cost of good sold = gross loss
11.11 Variable costs
11.11.1 change with output (raw materials)

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