Sources of Finance & Financial Controls

These flashcards cover key concepts regarding sources of finance, financial controls, break-even analysis, and cash flow forecasts, designed to aid in exam preparation.

What are the short-term sources of finance for a business?

Bank Overdraft, Trade Credit, Credit Card, Short-Term Loan, Accrued Expenses.

What is the purpose of financial controls within a company?

Financial controls protect a business from waste, theft, or poor decision-making.

What are the medium-term sources of finance used for?

They are used to buy equipment or vehicles that will last a few years.

What is the formula for calculating the Break-Even Point?

Break-Even Point = Fixed Costs / Contribution.

What is a cash flow forecast?

A cash flow forecast predicts the inflows (money coming in) and outflows (money going out) for a future period.

What does contribution refer to in break-even analysis?

Contribution = Selling Price per Unit - Variable Cost per Unit.

Why is choosing the correct type of finance essential for a business?

To match the finance type with the specific needs and duration of use.

List two components of a cash flow forecast.

Opening Cash Balance, Cash Inflows.

What is the Margin of Safety in break-even analysis?

Margin of Safety = Expected Sales - Break-Even Point.

What does profitability refer to in business analysis?

Profitability refers to a business’ ability to make a profit.