finance definitions
what is cashflow
money flowing in and out of a business
what is a financial objective
monetary targets set by a business
what is investment
moeny spent by a business on an asset it hopes to make a profit
what is return on investment
the extent to which an investment leads to additional profit
what is revenue
the value of goods and services sold by a business
what is cost of sales
costs that can be directly linked to the production of a good or service
what is an expense
general costs that most businesses occur
what are net financing costs
interest paid minus interest recieved
what is taxation
money given to the government to spend on public services
what is budgeting
a form of financial planning involving the setting financial targets
what is variance
the difference between a budgeted figure and an actual figure
what is adverse variance
the difference between a budgeted figure and an actual figure that damages a businesses profit
what is a favourable variance
the difference between a budgeted figure and an actual figure that improves the businesses profit
what is zero based budgetting
a system of budgeting where budgets arew worked out from scratch rather than simply basing budgets of figures from the previous year
what is profitability
the extent to which business activities yeild profit
what is output
the quantity of goods a business produces
what is contribution per unit
selling price - variable costs
what is total contribution
CPU x output
what is break even
the level of output at which costs equals total revenue
what is a margin of safety
the difference between the actual level of output and the breakeven level of output