Flash cards Business finance

Gross profit

The money that a company makes before the direct costs

Revenue

the money that comes into the business from selling goods or services

Net current assets

The money available in the business to fund day to day payments

Break even

To sell enough so you can cover all your costs

Net assets

Tangible items that will appear on the statement of comprehensive and inciudes Land

Cost of goods sold

The money producing the goods for a business, Materials, Labor, Manafacturing overhead

Net cash flow

What comes in and out of a business money and money in

Net book value

The value of a product after its value has decreased, Original cost of product

Profit

The money left after all expenses money you keep

Liquid capital ratio

Business can pay it’s short-term obligations using assets thst can quickly be turned into cash

Trade payable days

Shows how long a business takes to pay for goods or services brought on credit

Trade receivable days

Money that is owed to a business by its customers for goods or services sold on credit

Opening inventory

The value of stock a business has at the beginning of an accounting period

Reducing balance method

Where an asset value goes down faster at first, then slower at time

Straight line depreciation

The asset looses the same amount of value each year

Gross profit margin

How much money a business keeps from sales before other expenses

Profit/loss for the year

The money a business actually keeps or looses over the year after paying all its costs

Current ratio

Wether a business can pay its short term obligations with current assets, Cash, Inventory, accounts receivables

Mark-up

Amount added to the cost of price of a product to determine it’s selling price