Corporate vs Family Finance
What is used to explain company finances in a simple way?
A family budget.
What financial problem appears when company sales decrease?
Cash flow problems.
What does the word income mean?
Money that a person or company receives.
What paradoxical strategy can sometimes reduce long-term costs?
Spending more money.
If a company sells more products, what usually happens to its revenue?
Revenue increases.
What two basic elements exist in both company and family finances?
Income and expenses
Name one common reason why company revenue decreases.
Outdated products.
Money borrowed from a bank or financial institution that must be paid back with interest.
Loan
What can families install to reduce energy bills?
Better insulation or energy-efficient appliances.
If a company cuts unnecessary spending, what happens to expenses?
Expenses decrease.
What type of income do companies receive that families normally do not?
Sales revenue from products or services
How can increased competition affect a company’s revenue?
Competitors can take market share.
Money kept for emergencies or difficult financial situations.
Reserves
What can companies invest in to reduce production costs?
Automated equipment.
If revenue falls but fixed costs stay the same, what happens to profit?
Profit decreases.
What usually causes financial problems for both companies and families?
A decrease in income
What percentage decline in sales can create serious cash flow problems?
Around 10–20%.
A situation when a person or company cannot pay their debts.
Bankruptcy
Why might a well-managed company appear to be losing money temporarily?
Because of large one-time investment costs.
If a company invests in better machines that reduce costs in the future, what is the goal of this investment?
To reduce long-term costs.
What is the main difference between corporate finances and family finances even though the principles are similar?
The scale of money involved (millions or billions vs thousands).
Why can even a 10–20% decline in sales create serious financial problems for a company?
Because fixed costs remain the same while revenue decreases.
Valuable things that a person or company owns, such as property, money, or equipment.
Assets
What is the long-term result of strategic investments?
Lower costs and improved competitiveness.
Why can a company survive temporary losses?
Because it can use reserves, assets, or loans.