Sources of Finance
What is retained profit
This is the surplus funds that are reinvested back in the business, rather than being distributed to the owners.
What is fixed costs
Costs that do not change with the level of output, e.g., loan repayments and management salaries.
What is Profit Margin
The Ratio of which shows how much a company makes for each dollar of sales
What is operating cash flow
Cash generated by a company's core business activities
What is the balance sheet
Financial Statement that shows a companies assets, liabilities, and equity
Name 2 examples of short term financing
What are costs
The charges that an organization incurs from its operations, e.g., rent, wages, salaries, and insurance.
What is current ratio
What are investing activities
Buying of equipment or properties
What is net income
The "bottom line" of an income statement. The net amount of money a company makes
List 3 external sources of finance
What is revenue stream
The different sources of revenue (or income) for a business, e.g., revenue from sponsorship deals, merchandise sales, membership fees and royalties.
What is return on equity (ROE)
High return indicates efficient use of shareholders money
What are financing activities
Issuing shares or repaying loans
What is profit
List all the internal sources of finance
What is the equation for total revenue
This is the sum of income received by a business from its trading activities. It is calculated using the formula: TR = P × Q.
What ratio compares net income to total assets
What is return on assets (ROA)
What is the indirect method
The method of presenting cash flow with income and adjusts for non cash items
What is budget
A document or idea that can be used to forecast and plan financial decisions a company makes. Can forecast revenues and expenses
What type of source of finance are sharks on shark tank?
Business angels
What is the equation for average revenue
This is the amount a business receives from its customers per unit of a good or service sold. Mathematically, AR = TR ÷ Q = P where:
AR = Average revenue
TR = Total revenue
Q = Quantity of output, and
P = Price
What is quick ratio (acid-test ratio)
The measure of a company's ability to pay off current liabilities without relying on inventory
What is liquidity
Ease and speed a asset has the ability to be turned into cash
What is loss leader pricing
The pricing strategy that involves setting prices below cost to attract customers