Theme 2

• What does Sales of Assets mean?

  Selling old equipment
• What does leasing mean?

  Hiring equipment so dont have to invest money all at one time.
• What does Owner Capital mean?

  Owners personal savings.
• What does Retained Profit mean?

  Profit which was made in previous years.
• What does Overdraft mean?

  Going beyond money in a bank account (debt).
• What is a Business Angel?

  Private individual who invests assets into a business.
• What is Crowdfunding?

  Money raised by people usually online.
• What is Peer to Peer Lending?

  Lending money to a business.
• What does Trade Credit mean?

  Pay for raw materials at a later date.
• What does Share Capital mean?

  Money raised by selling shares.
• What is a Grant?

  A sum of money given to a business for a project.
• What is Venture Capital?

  Investors provide money to start or expand a business.
• What is a Loan?

  Sum of money given to a business by a bank which needs to be paid back with additional interest.
• What is Cash Flow?

  Amount of money flowing in and out of a business.
• What is an Inflow?

  Reciepts
• What is an Outflow?

  Payments
• Why is Cash Flow a Prediction?

  As costs can change.
• What are 3 issues with Cash Flow?

  Over otimistic about figures

  Customers may not pay in time

  Costs can change
• What are 3 benefits of Cash Flow?

  Advanced warnings

  Spot payment issues

  Ensure investers
• Why does Consumer Trends affect Sales Forecasting?

  Not staying up to date with trends means customers are likely to go elsewhere.
• Why does Economic Variables affect Sales Forecasting?

  Inflasion means people can afford less.

  Interest Rates determine if people buy or save.
• Why does Competitor Actions affect Sales Forecasting?

  Price cuts, marketing & promotions can influence customers.

  Bad ethics can deter consumers.
• What is Profit in absolute terms?

  The value of profit earnt.
• What is rofit in Relative Terms?

  Profit earned as a proportion of sales or investment.
• What is Break even?

  Business neither makes a profit or loss.
• What are the assumtions of Break Even?

  Sales price stays the same.

  Variable costs vary with output.

  All output is sold.

  Fixed costs stay the same.
• What does a Break even graph look like?

  Lable:

  A) Total Sales

  B) Total Costs

  C) Fixed Costs

  D) Variable Costs

  E) Loss

  F) Profit

  G) BEP

  
• What are 3 benefits of break even?

  Find the margin of safety

  Quick and easy

  Important to keep fixed costs low
• What are 3 drawbacks of break even?

  Unrelistic assumptions

  Does not take trends in account

  Sell more than one product
• What is a Budget?

  Financial plan for the future.
• What is a Historical Budget?

  uses last years figures.
• What is a Zero based Budget?

  Budget is set to 0 and is increased with proposals.
• What are the 3 main types of budgets?

  Revenue

  Profit

  Cost
• What is Varience Analysis?

  Calculating the difference between actual and budget.
• What is Favourable Variance analysis?

  Actual is better than budget.
• What is Adverse Variance analysis?

  Actual is worse than budget.
• What is cost of sales?

  Cost of raw materials.
• What are 2 ways to improve profit?

  Reduce product range

  Outsorce non essential functions
• What does being liquid mean?

  You have the money to pay debts.
• What does liquidation mean?

  Selling assets to afford to pay debts.