Financial Objectives, Cash-Flow and Profit (AQA A-Level Business): Flashcards
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Financial objectives
Financial objectives
Specific, measurable targets on monetary aspects of business
Six areas financial objectives cover
Six areas financial objectives cover
Revenue, cost, profit, return on capital, cash flow, cap structure
Cash flow definition
Cash flow definition
Actual movement of money into and out of a business
Profit definition
Profit definition
Sales revenue minus all expenditure (accruals accounting)
Cash flow vs profit - key fact
Cash flow vs profit - key fact
They are NOT the same thing
Why profitable businesses can fail
Why profitable businesses can fail
They experience cash-flow problems
Cause of cash-flow problems: inventory
Cause of cash-flow problems: inventory
Cash tied up in unsold stock for weeks/months
Trade credit definition
Trade credit definition
Allowing customers time to pay (30, 60, or 90 days)
Gross profit definition
Gross profit definition
Sales revenue minus direct costs of production
Direct costs of production include
Direct costs of production include
Raw materials, components, direct labour