Finn 3.4 Vocab

Cost of sales

The direct costs attributable to the production of goods sold by a company, including materials, labor, and manufacturing overhead.

Gross profit

The difference between revenue and the cost of goods sold, representing the profit earned from a company's core business operations before deducting operating expenses.

Expenses

The costs incurred by a business in order to generate revenue, including overhead costs such as rent, utilities, salaries, and marketing expenses.

Retained profit

The portion of net income that a company retains after paying dividends to shareholders (and taxes,expenses,interest), which is often reinvested into the business for growth or used to pay off debt.

Dividends

Payments made by a company to its shareholders as a distribution of profits, usually on a regular basis, representing a return on their investment.

Non-current assets

Longer term(fixed); Bought for business use; examples-Machinery, Property, Trademarks,etc.

Depreciation

How business’s asset’s lose value over time from ‘wear and tear’

Current assets

Short-term Assets that are expected to be converted into cash or used up within one year, including cash, debtors, and inventory

Current liabilities

Debts that must be settled within a year; 3 types- Short term loans, Overdrafts, ‘accounts payable’

Non-current liabilities

Debts to be repaid after 1 year examples- Mortgages, long term bank loans

Net assets

The total assets minus the total liabilities; should be equal to the value of equity in the business

Working capital

the money a company has to cover its short-term expenses, which are due within a year. It's calculated by subtracting a company's current liabilities from its current assets.

Equity

The ownership interest in a company, representing shareholders' residual claim on its assets after deducting liabilities.

Intangible assets

Non-physical assets with value that is derived from rights and privileges, such as patents, trademarks, copyrights, and goodwill.

Goodwill

The premium paid for acquiring a company above its net tangible assets value, representing the value of its reputation, customer base, and other intangible factors.