BUSS 3 Finance

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Across
  1. 1. concern A business that is viable and able to continue in business for the foreseeable future
  2. 2. expenditure Spending on day-to-day operation of the business – e.g. paying for materials, staff costs, management salaries, advertising
  3. 5. A measure of the percentage return that a business earns from the capital employed in the business. Often referred to as the “primary ratio”
  4. 8. ratio A simple and popular measure of liquidity that assess the ability of current assets (e.g. cash, stocks) to finance current liabilities (e.g. trade creditors)
  5. 10. profit The profit earned by a business from its entire trading operations – stated before financing (e.g. interest) and tax
  6. 11. debtors Amounts that are owed to a business from its customers
  7. 12. capital The amount invested into a company by shareholders
  8. 15. appraisal Analytical techniques to help management evaluate the returns from potential investments, and to help choose between competing investments
  9. 16. Amounts set aside to cover future costs or liabilities (e.g. redundancies, business closures, legal disputes)
  10. 18. assets Assets such as property, equipment and vehicles that are intended to be retained and used in a business for more than one year
  11. 20. An accounting estimate of the fall in value of a fixed asset over time
  12. 23. sheet The financial statement that provides a snapshot of the assets and liabilities of a business at a particular date
  13. 24. turnover A liquidity ratio that looks at how often a business rotates its stock during a year
  14. 26. turnover A ratio that calculates the relationship between revenues and the total assets employed in a business
  15. 27. capital The net amount invested by a business to finance day-to-day trading: usually calculated as current assets less current liabilities
  16. 28. Amounts owed by a business to others
  17. 31. tax The tax levied on the profits of companies. The percentage varies depending on the size of the profits earned; typically 20-30%
  18. 32. days A ratio that focuses on the average time it takes for trade debtors to settle their accounts. Usually measured in days
  19. 33. An intangible asset that can be included in a balance sheet = the difference between the net assets of a business acquired and the price paid for the business
  20. 34. issue The issue of new shares to existing shareholders in order to raise new finance. The new shares are usually offered at a significant discount to the existing share price to encourage take-up
  21. 35. factor The multiplication factor that converts a projected cost or benefit in a future year into its present value
  22. 37. present value The present value of a series of future net cash flows that will result from an investment, minus the amount of the original investment
Down
  1. 1. A ratio that focuses on the long-term financial stability and capital structure of a business. The gearing ratio measures the proportion of assets in a business that are financed by borrowing
  2. 3. statement A financial statement that summarises the trading results of a business over a specific period – usually one year
  3. 4. analysis Interpretation of financial performance by calculating and interpreting ratios
  4. 6. earnings Profits earned by a business that are kept in the business rather than distributed as dividends
  5. 7. A long-term source of finance – a debenture is a form of bond or long-term loan issued by a company
  6. 9. Amounts owned by, or owed to a business
  7. 13. period The time it takes for a project to repay its initial investment
  8. 14. ratio A liquidity ratio that looks at whether a business can pay for current liabilities out of cash and near-cash assets (it ignores the value of stocks)
  9. 16. The amount of profit earned in a period (absolutely measure) or rate of profit earned compared with revenue (relatively measure)
  10. 17. returns The rewards earned by shareholders = dividends paid to them + any increase in the value of their shares
  11. 19. flow targets Specific objectives set by a business for cash-flow generated by a business
  12. 20. yield A measure of shareholder return – calculated by comparing the dividend per share by the share price
  13. 21. quality The sustainability of profit from one period to the next. Higher quality profit is profit that is likely to be repeated rather than affected by one-off items
  14. 22. rate of return A measure of the total accounting return from an investment project
  15. 25. Where a business suffers financial difficulties from expanding too quickly – usually suffering set-up losses and increased working capital
  16. 29. The ability of a business to finance required payments to creditors
  17. 30. minimisation A strategy of achieving the most cost-effective way of delivering goods and services to the required level of quality
  18. 31. days A ratio that estimates the average period (in days) taken to settle amounts owed by a business to suppliers
  19. 36. expenditure Expenditure on assets which are intended to be kept in the business (e.g. IT systems, machinery) rather than sold or turned into products