Business 1.3

• aim 


  a long term goal a business wants to achieve
• objectives


  more specific measurable steps
• survival


  having enough sales to cover costs and still be trading
• dividend


  the percentage of profit that is paid to shareholders of a company each year
• fixed costs


  costs that do not change as the level of production changes
• variable costs


  costs that change i. direct relation to the amount sold or produced by a business
• interest


  a percentage charge on borrowed money / percentage reward for saving money
• total costs


  total fixed costs + total variable costs
• Variable costs


  costs per unit x quantity sold
• Revenue


  selling price x quantity sold
• Profit


  total revenue - total costs
• Interest percentage rate 


  total repayment - borrowed amount

  --------------------------------- x 100

  borrowed amount
• Total interest


  ((amount borrowed x annual percentage rate)x number of years) + amount borrowed
• Contribution


  selling price - variable cost per unit
• Break-even point in units


  fixed costs

  ---------------

  contribution
• Break-even point in costs/revenue 


  break-even point in units x sales price
• Margin of safety


  actual level of sales - break even level of output
• Opening balance


  previous month's closing balance
• net cash flow


  cash in - cash out
• Closing balance


  opening balance + NET CASH FLOW
• Examples of financial aims and objectives:

  -survival

  -profit

  -sales

  -market share

  -financial security
• Examples of non-financial aims and objectives

  -social objectives

  -personal satisfaction

  -challenge

  -independence

  -control
• What has a major impact on a business' aims and objectives?

  the size and scale of the business
• fixed costs


  costs that do not vary with the output produced by a business
• variable costs


  costs that change directly with the number of products produced
• total costs


  all costs of a business
• total repayment


  interest rate x borrowed amount

  ----------------------------- + borrowed amount

  100
• Break-even graph


  .

  
• Ways of how cash is important to a business

  -to pay suppliers

  -to pay overheads

  -to pay employees

  -to prevent insolvency
• Which acronym is used by business to create objectives

  Specific

  Measurable

  Achievable

  Realistic

  Time-bound
• What is financial security?


  being able to afford to pay off all costs and have enough cash left to survive
• interest


  charge on borrowing money
• insolvency


  when a business lacks to pay off its debts
• share capital


  investment raised from selling shares to investors
• loan


  borrowing an amount of money from the bank which is paid in monthly instalments at a fixed rate of interest
• mortgage


  type of loan that is secured on property with the interest being either fixed or variable
• venture capital


  money invested by an individual or group that is willing to take the risk of funding a new business in exchange for an agreed share of the profits which is similar to a mix of loan and share capital
• retained profit


  profit kept by the business from previous years
• crowdfunding


  raising capital online from lots of small investors
• overdraft


  having a negative bank balance