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DECA Accounts & Finance
Terms in this set (54)
Sale- and - leaseback
a source of external finance involving a business selling a fixed asset (such as its computer systems or a building) but immediately leasing the asset back. In essence, the lessee transfers ownership to the lessor but the asset does not physically leave the business.
investment spending on fixed assets such as the purchase of land, buildings and machine equipment
A financial service that allows a business to raise funds based on the value owed by its debtors,
External sources of finance
Means of recieving money from outside the business. Examples include share capital, loan capital, overdrafts, trade credit, grants, subsidies, debt factoring, leasing, venture capital and business angels.
Internal sources of finance
Means of recieving money from inside the business. Examples include personal funds, retained profits, and sale of unused assets.
a term used to describe a person or business that is renting property or capital equipment
medium to long sources of finance obtained from commercial lendors such as banks
allows a business to temporarily take out more money than it has in its account
are funded by the government to lower a firm's production costs as output provides extended benefits to society, e.g. farmers are often provided this in order maintain operations
allows a business to 'buy now and pay later'. The credit provider does not receive any cash from the buyer until a later date (usually allow between 30-60 days).
high-risk captial, usually in the form of loans or shared invested by venture captial firms (usually at the start of a business)
costs specifically attributed to the production or sale of a particular good or service.
the costs that do not vary with the level of output. They exist even if there is no output, e.g. the cost of rent, management salaries, and interest repayments on bank loans.
Indirect costs (overheads)
costs that do not directly link to the production or sale of a specific product, e.g. rent, wages of cleaning staff, and lighting
the money that a business collects from the sale of its goods or services. It is calculated by multiplying the unit price of each product by the quantity sold.
those that have an element of both fixed costs and variable costs, e.g. power and electrcitiy or salaried staff who also earn commission.
the sum of all variable costs and all fixed costs of production.
costs of production that change in proportion to the level of output, e.g. raw materials and piece-rate earnings of production workers
the positive difference between a firm's revenues and its costs
a statement of a business' assets, liabilities, and capital during a period of time.
Cost of goods sold (COGS)
are the direct costs attributable to the production of thegoods sold by a company.
the fall in the value of fixed assets over time due to wear and tear and obsolence.
any asset used for business operations (rather than for selling) that is likely to last for more than 12 months from the balance sheet date
the difference between a businsess' sales revenue and its direct costs dealing with the production of their product.
A financial statement of a firm's trading activities over a period of time, also known as the profit and loss account
Non-physical fixed assets that have the ability to earn revenue for the business (e.g., brand names, goodwill, trademarks, copyrights, and patents)
shows the value of a business by calculating the value of all of its assets minus its liabilities.
An item on the income statement that shows how much of the net profit after interest and taxes is kept by the business for its own use, such as reinvesting in the company or expanding the business
the amount of money raised through the sale of shares
is a company's liquid assets, short-term liabilities and working capital. Formula: current assets/ current liabilities
Gross profit margin (GPM)
gross profit margin shows the gross profit as a percentage of sales revenue. Formula: (gross profit/sales revenue) x 100
assets within the company that can be turned into cash within 12 months and not lose their value.
ratio that looks at the company's ability to pay its short-term liabilities, by comparing working capital to short-term debts etc. Two liquidity ratios are current ratio and acid-test ratio (Quick).
Net profit margin (NPM)
A percentage which shows the percentage of sales turnover that is turned into profit after direct & indirect costs are taken out.
(Working capital or net current assets)
the cash or liquid assets available for the daily running of a business
Items with a monetary value that belong to a business. They can either be fixed assets (such as machinery,tools and buildings) or current assets (such as cash,stock and debtors.
Refers to the transfer or movement of money into and out of an orginization. Cash inflow mainly comes from sales revenue whereas cash outflows are for items of expenditure.
The value of cash left in a business at the end of each month, as shown in its cash flow forecast or statement, using the formula: Closing balance = Opening balance plus Net Cash flow.
represent the money that a business owes that needs to be repaid within the next 12 months.
Are customers who have purchased goods or services on credit, so owe the biz money which is collected at a later date.
Are debts owed by a business.
the ability of a business to convert assets into cash quickly without a fall in its value
Net cash flow
The cash that is left over after cash outflows have been accounted for from the cash inflows per time period.
refers to the value of cash in a business at the beginning of each month, as shown in its cash flow forecast or statement. It is equal to the closing balance in the previous month.
are the cost not directly associated with the production process yet necessary for providing and maintaining bussiness operations e.g. lighting, rent, security and insurance
The physical goods that a business has in its possesion for further production( raw materials, unfinished goods)
Average rate of return
Calculates the average annual profit of an investment project, expressed as a percentage of the initial sum of money invested
The purchase of assets with the potential to yield future financial benefits, upgrading computer systems or the purchase of property
A financial-decision-making tool that helps managers to calculate whether certain investment projects should be undertaken based mainly on quantitative techniques
An appraisal technique that calculates the length of time needed to earn back the initial expenditure on an investment
a clearinghouse for information on the creditworthiness of individuals or businesses
management of money
A fee for borrowing money, added to a monthly credit card bill.
Quick Ratio (Acid Test)
(Current Assets - Inventory) / Current Liabilities
THIS SET IS OFTEN IN FOLDERS WITH...
DECA Business Organization
DECA Human Resources
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