targets expressed in monetary terms. These include: making a profit, earning income, financial security and building wealth
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Non-Financial Objectives
Non-monetary targets. These include: personal satisfaction, challenge, helping others and independence and control
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Revenue
the amount of income received from selling goods and services over a period of time
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Revenue Formula
Price X Quantity Sold (P xQ)
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Sales Volume
the number of products sold by a business over a period of time
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Fixed Costs
Costs which do not vary with the level of output or sales e.g. rent, insurance and salaries
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Variable Costs
Costs which vary directly with the level of output e.g. the cost of raw materials
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Total Costs
All the costs of a business; Total Costs = Fixed Costs + Variable Costs (TC=FC+VC)
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Profit
occurs when the revenue of a business are greater than its costs over a period of time
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Loss
occurs when the revenues of a business are less that its costs over a period of time
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Profit/Loss Formula
Profit/Loss= Total Revenue - Total Costs
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Cash
notes, coins and money in the bank; money available to the business for day to day spending
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Cash Flow
the flow of cash into and out of the business
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Cash Flow Forecast
a prediction of how cash will flow through the business over a period of time
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Inflow
the cash flowing into the business i.e. its receipts (such as sales revenue)
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Outflow
the cash flowing out of a business i.e. its payments (such as wages and bills)
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Net Cash Flow Formula
Net Cash Flow= Inflows- Outflows
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Insolvency
when a business can no longer pay its debts i.e. when they don't have enough cash for day to day expenses
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Opening Balance
the amount of cash in a business at the start of the time period. This will be the same as the closing balance of the previous time period
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Closing Balance
the amount of cash in a business at the end of the time period; Closing Balance = Opening Balance + Net Cash Flow
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Trade Credit
where a supplier gives a customer a period of time to pay a bill for goods and services once they have been delivered
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Stock
materials that a business holds. This can include finished and semi-finished products and raw materials. Having lots of cash tied up in stock may affect the firms cash position
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Business Plan
a document/plan for the development of a business. A business plan includes forecasts of items such as sales, costs and cash flow. A business plan reduces the risks involved in setting up a business
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Long-term finance
sources of funding for businesses that are borrowed or invested typically for more than a year
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Short-term finance
sources of funding for businesses that have to be repaid fairly quickly, usually within a year
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Share
a part ownership of a business
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Shareholders
the owners of a business
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Other cards in this set
Card 2
Front
Non-monetary targets. These include: personal satisfaction, challenge, helping others and independence and control
Back
Non-Financial Objectives
Card 3
Front
the amount of income received from selling goods and services over a period of time
Back
Card 4
Front
Price X Quantity Sold (P xQ)
Back
Card 5
Front
the number of products sold by a business over a period of time
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