Business Unit 3.3

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  • Created by: 13evewat
  • Created on: 18-04-18 18:45
Financial Management
Changing monetary variables such as cash flows to achieve financial objectives such as improved cash flow.
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Cach Flow
The flow of cash into and out of a business.
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Closing Balance and Opening Balance
Closing- Money expected in the bank at the end of the month. Opening- Money in the bank at the beginning of the month.
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Net Cash Flow
Toatal inflows - Total outflows
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Decreasing Cash Outflows
Delay paying invoices. Leasing rather than buying. Reduce stock orders. Improve credit terms with suppliers. Use cheaper sullpiers.
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Improving Cash Inflows
Selling assets. Increasing sales revenue. De-stocking. Reduce credit terms with customers. Encourage customers to pay early. Use short term sources of finance e.g overdrafts.
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Leasing
Renting equipment rather than buying it to help reduce outflows.
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Selling Assets
Selling items of value that the business owns to improve inflows. E.g property or equipment.
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Break-even Point
The point where total costs and total revenue is equal. The business isn't making a loss or a profit.
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Break-even Formula
Total fixed costs/ (Price-Variable cost per item)
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Margin of Safety
Amount of output between the actual level of output and where profit is beig made and the break-even point level of output. How much production will fall before making a loss.
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Margin of Safety Formula
Max or current output- Break-even output
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Profit
Total revenue - Total costs
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Total Revenue
Income from sales. Price x Quantity sold
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Insolvency
When the business is unable to pay their debts.
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Ways of Financing Growth
Share capital (selling shares). Taking out a bank loan. Retained profit. Selling Assets.
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Other cards in this set

Card 2

Front

The flow of cash into and out of a business.

Back

Cach Flow

Card 3

Front

Closing- Money expected in the bank at the end of the month. Opening- Money in the bank at the beginning of the month.

Back

Preview of the back of card 3

Card 4

Front

Toatal inflows - Total outflows

Back

Preview of the back of card 4

Card 5

Front

Delay paying invoices. Leasing rather than buying. Reduce stock orders. Improve credit terms with suppliers. Use cheaper sullpiers.

Back

Preview of the back of card 5
View more cards

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