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Details Title: Business Finance Description: Terms related to finances Total Flash Cards: 33 Created: 04/23/2007 01:10:43	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term Accounting Definition The collecting, recording, compiling and forecasting of financial information. Term Adverse variance Definition When the variance between actual and budgeted figures results in lower profit. Term Balance sheet Definition A statement of the organisation's assets and liabilities at a precise point in time. Term Bankruptcy Definition When an individual is unable to pay its liabilities, debts and payments. Term Breakeven point Definition When the company's total costs equal its total revenue; therefore it is no longer making a loss. Term Creditors Definition Individuals or other businesses that are owed money by the business. Term Capital Employed Definition This is the total amount of capital or money put into the business. Term Debtors Definition People or companies that owe the business money. Term Fixed costs Definition Costs which don't vary with output e.g. rent. Term LTD Definition Limited company - shares not available through the stock market. Term Margin of safety Definition The amount by which demand can fall before the company begins to make a loss. Term Liabilities Definition The money that a business owes to others, such as bank loans, overdrafts and trade credit (money owed to suppliers) Term PLC Definition Public limited company - shares are available to the public on the stock market. Term Profit margin Definition A proportion of sales revenue which can be expressed as a total or on a per unit basis. Term Variable costs Definition Costs which vary with output e.g. raw materials. Term Venture capital Definition This is used for a medium sized business when they need extra capital but are unable or unwilling to float on the stock market. Term Working capital Definition The day to day finance needed for running a business. Term Acid Test Ratio Definition This measures the liquidity of a business and is calculated by the ratio of current assets minus stock to current liabilities. Term Assets Definition Everything that a company owns and has a money value. Term Balance Sheet Definition An account that gives a statement of a firm’s wealth on a particular date and shows its assets, liabilities and capital. Term Cash Flow Forecast Definition A prediction of future flows of cash into and out of a business set out in a chart or graph. Term Cash Deficit Definition A situation where a firm finds itself short of cash because the outflow is greater than the inflow. Term Cash Surplus Definition A situation where the cash inflow is greater than the cash outflow. Term Cost of sales Definition The cost of goods made or bought by a business. It is calculated by taking opening stock + purchases – closing stock. Term Current ratio Definition This measures a firm’s ability to pay short term debts by comparing its current assets with its current liabilities. Term Dividend Definition Payments made to shareholders from the profits of a company. Term Financing-Long Term Definition Money borrowed for at least ten years which will be used to start up larger businesses, to buy lifelong assets such as buildings and to pay for large scale expansion. Term Financing-Medium Term Definition Money borrowed for between three and ten years which may be used to buy assets such as machinery, to set up the business and to pay for small scale expansion. Term Financing-Short Term Definition Money borrowed for between one day and three years. It is mainly needed to help cash flow, to buy assets such as vehicles and to buy in additional stocks of materials. Term Grants Definition Money given to a firm to help it to operate and expand. This does not have to be paid back. Term Hire Purchase Definition The buying of equipment by paying in instalments, usually including interest. Term Net Cash Flow Definition The difference between inflows and outflows. Term Re-invested Profits Definition Profits kept back in the company as a reserve or for re-investment.