business-putting a business idea into practice

what are the 5 financial aims?

survival-businesses should have enough money to stay open

maximise profit- buy more materials= improvements n customers

increased market share- establish itself

achieving financial security- can depend on its own revenue

maximise sales- = maximising profit

what are the 4 NON- financial aims

accomplishing a personal challenge- can b proud n have rewards

personal satisfaction- happy and interested in own job

gaining independence- some may want to b there own boss

doing whats right for society- eg no animal testing

objective

helps businesses to achieve there aims, relate to surival, profit, sales etc

what can affect the aims and objectives of a business

the size and age of a business- small= focus on growth

large= focus on more attention

who owns the business- depending on if they want personal satisfaction/ maximise profit

the level of competition faced- highly competitive= focus on survival/ maxing sales. lowly competitive= increasing market share

whats revenue

income earned by a business

whats the equation for revenue?!

revenue= quantity sold x price

what are fixed costs?

they dont vary and HAVE to be paid EG!! rent, insurance, salaries

what are variable costs?

will increase as the firm expands EG!! raw materials, machinery

whats the equation for variable costs?

total variable costs= quantity sold x variable cost per unit

total costs for a firm is what and what added together

total costs= total VARIABLE costs + total FIXED costs

interest is….

added to loans and savings (it is like a charge for borrowing money)

whats the equation for interest?

interest= (total repayment - borrowed amount ÷ borrowed amount) X 100

what is profit?

is the difference between revenue and costs over a period of time. you make profit if u earn more then what u spend

equation for profit……

profit= revenue - costs

what is break even

means covering ur costs. its a level of sales a firm needs to order to just cover its costs

break even equation=

break-even points in units x sales price

what is revenue

is the income earned by a business

whats the equation for revenue

revenue= quantity sold x price

what is a fixed cost

they DONT vary and have to be paid EG!! rent, insurance, salaries

what is a variable cost

will increase as the firm expands outwards EG!! raw materials nd running machinery

whats the equation for variable costs

total variable costs = quantity sold x variable cost per unit

total cost=

total costs = total VARIABLE costs + total FIXED costs

what is interest

is added to loans and savings (like a charge for borrowing money)

interest=

interest = (total repayment - borrowed amount ÷ borrowed amount) x100

what is profit

profit is the difference between revenue and costs over a period of time

profit=

revenue - costs

what is meant by break- even

is the level of sales a firm needs in order to just cover its costs. if a firm sells more than there break even point then they will make profit

whats the equation for break even

break-even point for revenue= break-even point in units x sales price

whats the margin of safety

is the gap between the current level of output and the break-even output

margin of saftey=

actual sales - break even sales

what is cash and cash flow

is not the same as profit and is the money that a business can spend immediately. eg suppliers, employees. cash FLOW is the flow of all the money into and out of the business

what is the equation for net cash flow

net cash flow = cash inflows - cash outflows for a given period of time