SL Business- Finance

Personal Funds

Own savings used as internal finance by a sole trader.

Retained Profit

Profit left after all deductions, reinvested in the business rather than distributed to owners or shareholders.

Sale of Assets

Selling assets like machinery that are no longer required to generate cash.

Opportunity Cost

The potential cost of missing an opportunity by choosing one option over another.

Share Capital

Money raised by a business through selling shares.

Flotation

When a company becomes publicly held and sells shares to the public via stocks.

Rights Issue

An opportunity for existing shareholders to buy additional shares at a discounted price.

Bank Loan

A long-term loan usually taken out by larger businesses.

Overdrafts

An arrangement allowing a business to spend more than what is in its bank account, typically a short-term high-cost loan.

Trade Credit

An agreement with suppliers to pay for resources at a later date, usually with no interest.

Crowdfunding

Raising capital from many individuals using small amounts of money.

Leasing

Arranging for assets (like machinery) to be made available in return for regular payments.

Microfinance Providers

Lenders offering small amounts of finance directly to businesses or individuals lacking access to traditional finance.

Business Angels

Individual investors providing capital to start-ups or expanding businesses.

Venture Capitalist

Organizations that lend money or purchase shares in start-up businesses.

Debentures

Loans to a company that raise finance at a fixed interest rate.

Fixed Costs

Costs that remain constant regardless of the number of units produced.

Variable Costs

Costs that vary depending on the number of units produced.

Direct Costs

Costs that can be directly attributed to a specific product.

Indirect Costs

Costs that are not specific to any single product line.

Sales Revenue

The value of units sold by a business over a period, calculated as quantity sold multiplied by selling price.

Dividends

Payments made by a company to its shareholders from profits.

Statement of Profit and Loss

Document showing the income and expenditure of a business over a specific period.

Current Ratio

A measure indicating how many £ of current assets are available to cover each £1 of short-term debt.

Acid Test Ratio

A precise ratio measuring a business's ability to pay short-term debts, excluding stock from current assets.

Working Capital

The money a business has available to fund day-to-day activities.

Net Cash Flow

The difference between total cash inflows and total cash outflows.

Liquidity

The ability of a business to meet short-term commitments with available assets.

Cash Flow Forecasts

Predictions of anticipated cash inflows and outflows.

Simple Payback Period

The time it is expected for an investment to pay back for itself.

Average Rate of Return (ARR)

Average annual profits of an investment expressed as a percentage of the initial amount invested.