business- theme 2

Name some legal entities in the UK

• sole trader

• partnership

• private limited company

• public limited company

What are private sector companies

Businesses owned and operated by individuals motivated by profit and subject to market forces of demand and supply.

What are public sector companies

The part of the economy that is controlled by the government. These services are typically funded by taxes and are intended to benefit the entire population.

Characteristics of sole traders:

• can have employees but those employees do not own the business

• sole trader owns ALL the businesses assets

• personally responsible for all business debts

• has unlimited liability

list some sources of finance

• bank loans

• trade credit

• crowdfunding

• retained profit

• owners capital

• investors

• overdraft

• credit cards

what is revenue

money made from sales

R= P x Q

what is profit

money left after deducting costs from revenue

P= R-C

what is cash

the money a firm holds in notes, coins and in its bank accounts

what is cash flow

movement of money going into and out of a firms bank account

what is an asset

something a company owns

how can you categorise assets

• current assets

• fixed assets

• financial assets (like shares on a stock market)

what is liquidity

the companies ability to meet its short term financial obligations

liquidity measures how easily a business converts its assets into cash to pay its debts

what is inflation

the general increase in prices

cost of living crisis> groceries (eating), oil and gas (heating) and rent

what is a venture capitalist

a person who invests into high risk businesses

what is leasing

paying over a monthly period and then returning the asset

what is a hire purchase

paying to have an asset for a period of time- renting

what is a government grant

money received by the government

what is a dividend

payment for owning a share

what is an IPO

INITIAL PUBLIC OFFERING

when a private company first offers its shares to the general public

what are the different elements of a business plan

• business idea

• aims and objectives (SMART)

• market information

• location of operations and channels

• personnel

• buying and production

• premises and equipment

• financial forecasts

• marketing mix

• sources of finance

• legal business forms

cash flow forecasts: how to calculate net cash flow?

inflows- outflows