Business management quiz yes

cash

the money (or cash equivalents) a business has at a given time for immediate use

cash flow

the movement of cash into and out of a business over a period of time

cash flow crisis

a business risks insolvency or failure due to cash flow issues

cash flow forecast

records anticipated inflows and outflows of cash over a future period

efficiency ratios

measure how well resources like working capital and inventory are used

trade payables

money owed by a business to its suppliers

trade receivables

money owed to a business by its customers

working capital cycle

measures how long it takes to turn inventory into cash from sales

budget

an estimate of expenses and revenue for a set period of time, used for planning

cost center

part of a business for which only costs can be calculated, not profit

incremental budget

figures from previous budget are used as the basis for a new one

flexible budget

forecasted figures change along with things like sales or production levels

profit center

part of a business for which costs and revenues can be calculated

variance

the difference (positive or negative) between expected and actual budget figures

zero budget

figures from the previous budget are disregarded entirely

asset

any item of value owned by a business

current asset

easily converted to cash, usually in less than one year

current liability

short-term financial obligation, due to be paid in less than one year

distributed dividends

profit that is paid out to the owners (shareholders)

equity

the amount the owners would receive if a business stopped operating

financial accounts

aka: “financial statements;” common, standardized financial documents

gross profit

broad, simple indicator; subtracts only variable costs from revenue

liability

a debt owed by the business; it may be a “source of finance”

non current asset

easily converted to cash, usually takes more than one year

non current liability

long-term financial obligation, due to be paid in more than one year

operating profit

narrower indicator; subtracts variable and fixed costs from revenue

profit

any point above break-even; aka: the excess or surplus of revenue over costs

profit for the year

full indicator; subtracts all costs, interest, and taxes from revenue

retained profit

profit that is reinvested into the business to help secure its future

appreciation

the increase in an asset’s value over time

depreciation

the reduction in an asset’s value over a period of time

finished goods

products that are ready to be sold or delivered

inventory

all the finished goods (products) a business has ready to sell

raw materials

items used to produce products

residual value

any amount received if an asset is sold

turnover

the process of selling through all current inventory

works in progress

semi-finished goods that are not yet ready for sale

Debtor Days

(Current Trade Receivables ÷ Annual Sales on Credit) x 365

Creditor Days

(Current Trade Payables ÷ Annual Purchases on Credit) x 365