Definitions

• fixed costs are costs that do not change with the level of output e.g. rent, wages
• variable costs are the costs that change with the level of output e.g. wages
• working capital is the amount of money that a business has available to pay for day to day expenses
• angel investors are individuals who invest in start-up companies in exchange for a share of the company
• collateral is an asset used as security for a loan. It can be sold if the borrower fails to repay the loan
• crowdfunding is a way of raising money from a large number of people who contribute small amounts of money
• a public limited company is a company that has shares that can be sold to the public
• seedcorn capital is the initial capital that is used to start a business and is usually provided by the owner
• share capital is business finance that has no guarantee of repayment and is not secured by any asset
• a stock market is a market for buying and selling shares of stock in publicly traded companies
• venture capital is high-risk capital that is invested in start-up businesses
• Bankruptcy is when an individual is unable to meet the personal liabilities of their business
• creditors are people or businesses that have a debt owed to them by a business
• limited liability is when the owners of a business are not personally liable for the debts of the business
• a sole trader is a business owned by one person, they are responsible for all the business decisions
• unlimited liability is when the owner of a business is personally responsible for all debts of the business
• Just-in-time is a production system whereby raw materials and finished goods are delivered to the production line as they are needed
• A business plan is a document that outlines the businesses objectives, how it will achieve them and how it will be financed
• Cash flow forecast is a financial forecast that shows the cash inflows and outflows of a business over a period of time
• overdraft is when a bank allows a business to borrow money over and above the amount in their current account