Unit 5. Financial Information

Business finance

The funds necessary for a business to start, operate, and grow.

Working capital

Capital needed for day-to-day expenses; crucial for managing operational costs.

Fixed assets

Assets owned by a business that are used for more than one year.

Retained profit

Remaining profit reinvested back into the business after dividends are paid.

Overdraft

An agreement with a bank that allows a business to spend more money than it has in its account.

Lease

Obtaining temporary use of non-current assets by paying a fixed amount over time.

Cash-flow forecast

An estimate of total cash inflows and outflows of a business within a specified time period.

Net cash flow

The difference between total cash inflows and total cash outflows.

Income statement

A financial report showing the company's revenues and expenses over a specific period.

Statement of financial position

An accounting statement that records the assets, liabilities, and owner’s equity at a specific date.

Current assets

Resources expected to be converted into cash within one year.

Gross profit margin

Ratio measuring how much gross profit is earned for every dollar of revenue.

Return on capital employed (ROCE)

A measure of a company's profitability and the efficiency with which its capital is employed.

Liquidity

The ability of a business to cover its short-term debts with short-term assets.

Shareholder’s equity

The net worth of a company, representing the residual interest in the company's assets after liabilities are deducted.