finance
distinguish between Capital expenditure and revenue expenditure.
Capital Expenditure
Amount spent or acquired by a business to maintain or upgrade productive assets such as buildings and machinery.
Revenue Expenditure
Cash spent by a business during revenue generation or for maintaining a revenue generating asset.
Trade Credit
A credit given to a company by the suppliers which lets it buy supplies and pay for them later.
what are Business Angels
Usually wealthy businesses or individuals who provide capital investment for a start-up business
what are revenue streams and why does a business benefit from having many of them?
When a business has more than one source of income. The source of income/finance is called a revenue stream.
having more revenue streams increases income and provides minimisation of risks and potential finance problems.an item or a property owned by a person or a company.
asset
distinguish between grants and subsidies.
Grants:
Money given to a usually start-up business known as recipient, by the grantor, who is usually the government or other big organization,including subsidies.
Subsidies
Different types of benefits offered by the government to businesses with the aim of supporting desirable or economically beneficial activity.
distinguish between fixed and variable costs
Fixed Costs
Costs that a business faces which stays the same no matter the volume of output produced by the business.
Variable Costs
Costs that are directly proportional to the value of the output a business produces.
what is break- even quantity
Quantity of output which a business needs to produce in order for the revenue to be equal to the total costs.
internal source of finance where shareholders invest their own profit back into the business
retained profit
describe the process of debt factoring
Selling you unpaid customer invoices so that now the collect is responsible for chasing invoices.
Costs that are only partially proportional to the volume of output produced by the company.
repairs, monthly telephone charges, indirect materials, indirect labor, fuel and power,telephone charges
what is margin of safety and how is it expressed?
Is the excess of a company's sales revenue over the breakeven sales revenue. The higher the margin of safety is the less sensitive the company will be to an abrupt fall in revenue.
it is expressed as a %
distinguish between share capital and loan capital
Share Capital
Working capital and finance generated from shares of the shareholders.
Loan Capital
Generating working capital and finance through bank loans
Lending machinery or renting needles to the business activity machinery instead of buying it.
leasing
distinguish between direct and indirect costs
Direct Costs
Costs that are paid directly
Indirect Costs ( Overheads )
Costs which are not directly accountable to an object, but rather to a service. This includes security and personnel costs.
distinguish between total contribution and contribution per unit
Total Contribution
Is the difference between total sales and total variable costs.
Contribution per Unit
It is the difference between selling price per unit and the variable cost per unit
a short term source of finance where bank allows a business to go over the amount it has on it's account.
overdraft
capital invested in a project or a business in which there is a considerable element of risk, usually a new or expanding businesses
venture capital
what is revenue
A money which a business earns from its activity before paying taxes and other costs.
define/explain payback period, average rate of return and net present value
Payback Period
The time it will take for the money invested into an investment to return fully.
Average Rate of Return
The annual percentage of money which will return to a business after spending it into an investment.
Net Present Value
The money available to business from its investment every year.