14 terms

CN Business and Enterprise Unit 1 LO3 Finance keywords

Functional Areas - Finance keywords
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Retained profit
Profit kept in the business after tax and dividends have been paid.
Sale and leaseback
Selling an asset, such as a building, to a leasing company and paying an annual leasing charge so that asset can still be used.
Profit and loss account
This shows whether the business made a profit or a loss over the last period (usually a year). It is also known as the income statement.
Sales revenue
The value of goods sold. Sales revenue = number of goods sold X price.
Cost of goods sold
The cost to the business of the goods sold.
Gross profit
The difference between sales revenue and costs of making the products sold. Gross profit = sales revenue - cost of sales
Overheads
Expenses of the business that are not directly part of the production process (e.g. rent and management salaries).
Net profit
The difference between sales revenue and total costs of the business. Net profit = gross profit - overheads
Gross profit margin
The percentage of sales revenue that is gross profit. Gross profit margin % = (gross profit / sales revenue) X 100
Net profit margin
The percentage of sales revenue that is net profit. Net profit margin % = (net profit / sales revenue) X 100
Balance sheet
This lists the value of a company's assets and liabilities.
Assets
Items owned by a business.
Liabilities
Debts owed by a business.
Collateral
An asset that a bank holds as security for the repayment of a loan.