1.3

• Define crowd funding?

  When a large number of people each contribute money towards funding a new business or business idea.
• Define venture capital?

  When a larger business provides the money/ funding for the start-up of a smaller business.
• Define share capital?

  Money gained through issuing shares in the company.
• What are the long term sources of finance?

  • personal savings
  • venture capital
  • share capital
  • bank loan
  • mortgage
  • retained profit
  • crowd funding
• What are the short term sources of finance?

  • overdraft
  • trade credit
  • sale of assets
• How can you calculate break-even point in units?

  fixed cost/ (sales price- variable price)
• Define break-even?

  When total revenue is equal to total costs.
• How could a business improve its net cash flow?

  • increase their prices of products/ services.
  • decrease expenses.
  • find a cheaper supplier.
  • reduce product/ service range.
• Why are aims and objectives different between businesses?

  • size and age of business
  • ownership type
  • level of competition
• How can you calculate revenue?

  Revenue = Price x Quantity
• Give examples of non-financial aims?

  • social responsibility
  • environmental sustainability
  • employee satisfaction
  • delegation and independence
• Give examples of financial aims?

  • profit maximization
  • cost minimization
  • revenue growth
  • shareholder wealth maximization
  • survival
  • achieve financial security
  • maximize sales market share
• How do you calculate profit?

  revenue - costs
• How do you calculate total costs?

  fixed costs + variable costs
• What is trade credit?

  When a supplier gives firms time to pay for certain purchases.
• What is an overdraft?

  When more money is taken out of a bank account than what has been paid in it for a brief amount of time (going below 0 for small periods of time).
• What is a disadvantage of an overdraft?

  A high interest rate.
• A disadvantage of selling shares for the busniess?

  Reduced delegation.
• How do you calculate interest (on loans) in %?

  (total repayment- borrowed amount) / borrowed amount x100
• How do you calculate revenue?

  price x quantity
• How do you calculate total costs?

  total fixed costs + total variable costs
• What us the formula for calculating the break-even point in units?

  fixed costs / (sales price- variable cost per unit)
• How do you calculate the break- even point in revenue?

  break- even point in units x sales price
• How do you calculate the margin of safety in units?

  Actual sales - Break-even sales
• How do you calculate net cash-flow?

  cash inflows- cash outflows
• What is the opening balance?

  the closing balance of the previous period.
• How do you calculate the closing balance?

  opening balance + net cash flow
• Define a business aim?

  What a business hopes to achieve in the long term.
• Define a business objective?

  A more specific goal which is measurable and is needed for the business to fulfill their aim.
• What is the difference between cash and profit?

  Cash refers to the actual money a company has on hand, while profit is the amount of money a company earns after deducting expenses from revenue.