Definitions 1
The total value of output of goods and services in a country in one year
Gross Domestic Product
Cost does not change in the short term
Fixed Cost
Income to a business during a period of time from the sale of goods or services
Revenue
Net profit reinvested back into a company, after deducting tax and payments to owners, such as dividends
Retained Profit
Working Capital
Current assets – current liabilities
Describes the increases in global trade and movement of people between countries
Globalisation
The increase in the average price level of goods and services over a period of time
Inflation
When countries agree to trade without import quotas or tariffs
Free Trade Agreements
Money obtained from sources outside and separate from the business
External Finance
Return on Capital Employed
Net profit/capital employed x100
The ability of the business to pay back short-term debts
Liquidity
Techniques used to cut down waste
Lean Production
The finance a business needs to pay its day to day costs
Working Capital
Records the difference between a country’s imports and exports
Balance of Payments
Net Profit Margin
Net Profit/Revenue x100
When government protects domestic businesses from foreign competition
Protectionism
Debts owed by the business. Can be current or non-current.
Liabilities
Policies controlled by the Central Bank that influences the money supply
Monetary Policy
The checking for quality standards throughout the production process by employees
Quality Assurance
Current Ratio
Current assets/current liabilities x100
Continuous improvement through less waste
Kaizen
Inventory to help deal with uncertainty
Buffer Inventory
Shows the stages between paying out cash for labor, materials, and so on, and receiving cash from the sale of goods.
Cash Flow Cycle
Fall in the value of a fixed asset over time
Depreciation
Equity
Total assets - total liabilities