AQA A level Business Finance
Study online at https://quizlet.com/_8lcvhp
1. Financial objective - finance goals that a business wants to achieve
- businesses usually have specific goals in mind, and
a specific period of time to achieve them
2. Cash flow Money flowing in and out of the business over a
period of time
3. Profit measures the extent to which revenues from selling
a product over some time period exceed the costs
incurred in producing it
4. Gross Profit revenue - cost of goods sold
5. Operating profit Gross profit - indirect sales
6. Profit of the year Operating profit - costs
7. Return on investment - how efficient a business is
- net profit/cost of investment × 100
8. Budget A financial plan for a business normally drawn upon
a monthly basis
9. Profit budget income - expenditure
10. benefits budgets helps make more informed decisions
allows managers to make sure that they do not over-
spend
11. Disadvantages of budgets can be restrictive
could be inaccurate
12. examples of cash inflow sales revenue
rental income
1/6
, AQA A level Business Finance
Study online at https://quizlet.com/_8lcvhp
13. Example of cash outflows wages
materials
14. Net cash flow Total incomes - total expenditures
15. Opening balance previous month closing balance
16. Closing balance opening balance + net cash flow
17. Profitability the degree to which a business or activity yeilds
profit or financial gain.
18. Gross profit margin Gross profit/revenue × 100
19. Operating profit margin Operating profit/revenue × 100
20. Profit for the year margin Profit of the year/revenue × 100
21. Payables (Creditors) People who the business owes money to
22. Receivables (Debtors) When customers owe the business money
23. Break even The point in which total revenue is equal to total costs
24. Contribution The difference between selling price and variable
costs
25. Contribution per unit Selling price × quantity per unit
26. Break even output Fixed costs/contribution per unit
27. benefits of break even analysis Can support the application of a loan
can be quickly completed
28. drawbacks of break even analysis based on assumptions
difficult to use when a range of products are sold
2/6
Study online at https://quizlet.com/_8lcvhp
1. Financial objective - finance goals that a business wants to achieve
- businesses usually have specific goals in mind, and
a specific period of time to achieve them
2. Cash flow Money flowing in and out of the business over a
period of time
3. Profit measures the extent to which revenues from selling
a product over some time period exceed the costs
incurred in producing it
4. Gross Profit revenue - cost of goods sold
5. Operating profit Gross profit - indirect sales
6. Profit of the year Operating profit - costs
7. Return on investment - how efficient a business is
- net profit/cost of investment × 100
8. Budget A financial plan for a business normally drawn upon
a monthly basis
9. Profit budget income - expenditure
10. benefits budgets helps make more informed decisions
allows managers to make sure that they do not over-
spend
11. Disadvantages of budgets can be restrictive
could be inaccurate
12. examples of cash inflow sales revenue
rental income
1/6
, AQA A level Business Finance
Study online at https://quizlet.com/_8lcvhp
13. Example of cash outflows wages
materials
14. Net cash flow Total incomes - total expenditures
15. Opening balance previous month closing balance
16. Closing balance opening balance + net cash flow
17. Profitability the degree to which a business or activity yeilds
profit or financial gain.
18. Gross profit margin Gross profit/revenue × 100
19. Operating profit margin Operating profit/revenue × 100
20. Profit for the year margin Profit of the year/revenue × 100
21. Payables (Creditors) People who the business owes money to
22. Receivables (Debtors) When customers owe the business money
23. Break even The point in which total revenue is equal to total costs
24. Contribution The difference between selling price and variable
costs
25. Contribution per unit Selling price × quantity per unit
26. Break even output Fixed costs/contribution per unit
27. benefits of break even analysis Can support the application of a loan
can be quickly completed
28. drawbacks of break even analysis based on assumptions
difficult to use when a range of products are sold
2/6
