Studied by 0 peopleaim
states the overall purpose for a business
mission
a general description of the overall aims
objectives
SMART - specific, measurable, achievable, realistic, timed targets
financial objectives
objectives that relate to survival, market share, growth, etc
non-financial objectives
social, environmental, and personal targets
revenue
the income gained by a business from selling goods and/or services
a form of cash inflow
costs
the spending that occurs to set up and run a business
fixed costs
costs that do not change with the output of a business
variable costs
costs that change with the output of a business
total costs
total variable + total fixed
profit
difference between total revenue and total costs
gross profit
the amount of money after the direct costs of the products have been deducted (costs of sales)
net profit
the profit a business has after all expenses have been deducted
interest (cost)
a business might borrow in the form of an overdraft, loan, or mortgage. the interest paid is a form of cash outflow
interest (reward)
interest on savings will be a cash inflow - a form of income. (not classed as revenue)
break even
break even is when the revenue earned by sales is equal to the cost of selling the output.
break even quantity
how many goods you must sell to break even
margin of safety
the difference between the break even point and the current level of output
formula for break even output
total fixed costs/price - variable cost per unit
cash
the amount of actual money that the business has at its disposal
cash inflow
cash coming into the business at the moment it comes in
cash outflow
cash leaving the business at the moment it leaves
cash flow forecast
a table showing predicted opening balances, cash inflows and outflows, net cash flows and closing balances
opening balance
the value of cash at the start of a trading period
closing balance
the value of cash at the end of a trading period
trade credit
the period of time a supplier gives its customers to pay after the goods have been delivered
security
the existence of a back up plan to pay if you cannot
internal sources of finance
involves raising funds from within the business
external sources of finance
involves raising funds outside of the business
retained profit
the profit that the business already has from selling goods
overdraft
a short-term source of finance - allows the business to withdraw funds from its account that are not there, to an agreed max limit, when additional amounts of temporary money are needed
Note
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