Sources of Finance
Profit from previous years.
Retained profit?
The sum of income received by a business from its trading activities
What is revenue?
Revenue minus Cost of Sales
What is gross profit?
Assess the business’s ability to pay its immediate/short-term debts.
What is Liquidity Ratios?
Inflows minus outflows
What is net cash flow?
Analyzing an investment using numbers.
What is quantitative analysis?
Finance that come from within the organization, from its own resources and assets, without the help of a third party.
What are internal sources of finance?
Revenue - cost =
What is profit?
money owed by a business to individuals, suppliers, financial institutions and shareholders
What is a Liability?
Measures the success of the business.
What are Profitability ratios?
Predictions of cash inflows and cash outflows for a specific period of time.
What is a cash flow forecast?
The environment in which an investment project will operate. Affects the entire market and a large amount of asset classes.
What is Systematic Risk?
Enables a customer to purchase and obtain goods and services but to pay for these at a later date.
What is a trade credit?
An expenditure that is evidently and explicitly associated with the output or sale of a certain good, service, or business operation.
What is a direct cost?
Organizations to which the business owes money.
What is Creditor?
Equity plus non-current liabilities
What is Capital Employed?
Reducing cash outflow by renting instead of buying assets.
What is leasing?
This is the length of time required for an investment project to pay back its initial cost outlay.
What is Payback Period?
Withdraw more money from their account than exists in the account.
What is an overdraft?
Paid irrespective of how much is produced or sold
What is a fixed cost?
Money invested into a business and is a liability. What you get, stake in business
What is equity?
Gross profit / Revenue X 100
What is Gross Profit Margin?
Obtaining credit for the purchase of a non-current asset.
What is a hire purchase?
The equation for ARR
What is Average profit divided by capital cost of investment?
Small loans and financial services to low-income individuals
What is microfinance?
A firm's expenditure that changes with the level of output.
What are variable costs?
The 3 Final Accounts
Income Statement (statement of Profit and loss), Balance Sheet (statement of Final Position), Cash Flow Statement
Compares the profit earned before paying interest and tax with the amount of capital employed by the business.
What is the ROCE?
A firm can receive cash earlier by selling its debts
What is a debt factor?
Corporate image, business objectives, environment and ethical issues, and industrial relations.
What are qualitative influences?