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Definition
| Gives the buyer the right to buy or sell foreign currency at some point in the future |
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Definition
| Issued by a company for a fixed rate of interest and for a fixed period of time |
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Definition
| An agreement to exchange currency in the spot market with an agreement to reverse the transaction in the future |
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Definition
| Debt to equity ratio. Higher the ratio the high risk of unpaid debts |
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Definition
| refers to the finance raised by a company issuing shares through the ASX |
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Definition
| Gross profit, Net profit, return on equity |
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Definition
| the business is taking greater financial risks |
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Definition
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Definition
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Definition
| Allows a business to overdraw their accounts to an agreed limit for a specific amount of time |
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Definition
| Expenses, Accounts receivable turnover (expressed in days) |
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Definition
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| Balance sheet accounting equation |
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Definition
| Assets= liabilites + owners equity |
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Definition
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Definition
| Money provided by an external lender |
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Term
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Definition
| allows for you to set up the business before making profit |
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Term
| Debt finance disadvantage |
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Definition
| you have to repay the loan |
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Term
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Definition
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Term
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Definition
| Opening stock + Purchases - closing stock |
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Definition
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Term
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Definition
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Term
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Definition
| Financial market for derivatives, financial instruments like future contracts or options which are derived from other forms of assets |
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Term
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Definition
| Difference between current assets and current liabilities. Represents those funds that are needed for the day-to-day operations of a business |
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Term
| Methods of managing trade creditors/suppliers |
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Definition
1. Discounts
2. Interest free credit periods
3. Extended terms for payments, sometimes offered by established suppliers without interest or other penalty |
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Term
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Definition
| Stratergy for managing cash flow. Identify periods of potential shortfalls and surpluses and ensures you have efficient cash flow throught the year. Can include paying/repaying more bills during periods of more money |
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Term
| Cash flow statement equation |
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Definition
| Opening cash balance + Cash inflows - outflows = closing cash balance |
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Term
| Discounts for early payments |
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Definition
| Stratergy of managing cash flow. Offering creditors a discount for early payments. Effective when targeted at creditors who owe the largest amounts over financial year |
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Term
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Definition
| Cost-free finance. If a business buys goods from a supplier and the account is due for payment in 30 days, the business has 30 days of cost free finance |
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Term
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Definition
| occurs when the payment is sent to but not received by the exporter bfore the goods are trasported |
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Term
| International Uncontrollable financial influence |
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Definition
| Currency fluctuations, interest rates and overseas borrowing. These influences are pat of the external business environment and may not be significantly controlled by the business |
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Term
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Definition
| Document drawn up by the exporter demaning payment from the importer of a specific time |
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Term
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Definition
| Funds available for the short term financial commitments of a business |
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Term
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Definition
| Importer can collect the goods only after paying for them |
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Term
| Working capital management |
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Definition
| Determining the best mix of current assets and current liabilities needed to achieve the objectives of the business |
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Term
| Importance of controlling loans |
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Definition
| Cost for establishment interest rates and ongoing charges must be investigated and monitored to minimise cost |
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Term
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Definition
| Commitment by the importers back, which promises to pay the exporter a specified amount when the documents proving shipment of the goods are presented |
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Term
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Definition
| Process of minimising the risk of currency fluctuation |
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Term
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Definition
| The value of one currency in another currency on a particular day |
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Term
| Document against acceptance |
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Definition
| The importer may collect the goods before paying for them |
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Term
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Definition
| Stratergy for managing cash flow. Selling of accounts rec. for a discounted price to a finance or specialist factoring company. Business saves on the costs involved in following up on unpaid accounts and debt collection |
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Term
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Definition
| Allows the exporter to receive payment and then arrange for goods to be sent |
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Term
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Definition
| Business may adopt a number of stratergies to eliminate or minimise the risk of foreign exchange exposure |
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Term
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Definition
| Simple financial instruments that may be used to lessen the exporting risks associated with currency fluctuations |
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Term
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Definition
| The ability of a business to pay their short term debts as they fall due |
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Term
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Definition
| Contract to exchange one currency for another currency at an agreed exchange rate on a future date |
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Term
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Definition
| The ability of a business to meet financial commitments in the long term |
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Term
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Definition
| Depreciation lowers the prie of Australian dollars in terms of foregin currencies |
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Term
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Definition
| Raises the value of Australian dollars in terms of foreign currency |
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Term
| Purpose of a cash flow statement |
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Definition
| To assess your income. Compare to last years and other businesses average to determine if youre actually doing well |
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Term
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Definition
| determines the price of one currency relative to another |
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Term
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Definition
| Owners claim of the assets e.g. capital, drawings |
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Term
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Definition
| Liabilites that have to be payed in over a year e.g. bank loans, mortgages, most loans |
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Term
| Considerations before taking out a loan |
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Definition
| If youre able to repay, how much external debt, interest rates |
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Term
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Definition
| The ability to maximise profits to satisfy sharholders both short and long term |
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Term
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Definition
| Contracts that lay out the detail of rental agreements in the real estate market |
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Term
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Definition
| To ability to minimise costs and manage assets to maximise profits |
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Term
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Definition
| The ability to increase its size in the long term |
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Term
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Definition
| assets that can be converted into cash within a year e.g. cash, debtors (acc. rec.), stocl |
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Term
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Definition
| Assets that can be turned into cash in over ayear e.g. equipment, buildings, land, car, machinery, furniture and investments |
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Term
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Definition
| liabilities that have to be payed of within a year e.g. creditors (acc.pay.), overdraft |
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Term
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Definition
| Assets that cant be touched e.g. goodwill, trademarks |
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Term
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Definition
| Source of funds for businesses and provides services such as eftpos and credit card |
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Term
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Definition
| Trade money and provides money for working capital |
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Term
| Finance and life insurance companies |
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Definition
| specialise in smaller commercial finance and are regulated by APRA. Provide loans to businesses through wire purchase loans |
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Term
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Definition
| Grown rapidly due to establishment of compulsory super. |
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Term
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Definition
| The market for new issues of stocks or bonds, when the proceeds from the sale go to the company |
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Term
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Definition
| primary and secondary market for the sale of shares to the public |
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Term
| Secondary financial market |
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Definition
| A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. |
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Term
| Australian Securities and Investment Commission |
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Definition
| The regulator of Australia's markets and financial services. The ASIC ensures that Australia's financial markets are fair and transparent. |
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Term
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Definition
| taxes against profits earned by businesses during a given taxable period; they are generally applied to companies' operating earnings, after expenses such as COGS, SG&A and depreciation have been deducted from revenues. |
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