finance
Start-up capital is the finance needed by a new business to pay for essential fixed and current assets before it and begin trading
Revenue- money coming into the business. Selling products
Revenue= number of products sold x price
Costs- money going out of the business. E.g. salaries, rent, electricity/water
Profit- Money which is left over after all costs have been paid
P= R-C
A car manufacture
- Machinery
- Labour
- Land
- Utilities
- Raw materials
A school
- Labour
-Land
- Equipment
- Utilities
Capital expenditure: money spent on long-lived fixed assets such as premises, vehicles and equipment.
Operating Expenditure: money for running costs such as wages, rent, telephone and other charges.
Why do business need funds?
Other than start-up costs, why may a business need extra funds other than sales?
For advertising their brand and transporting goods. They would need to pay for other factors for example new shops, factory’s etc.
How do you decide which method of finance?
-Status and size of the business
- Track record and experience of management team
- Growth prospects and profitability
- Level of gearing
Costs the money going out of the business. 4 examples of costs:
- office visits
- drugs
- emergency room
Operating cost is the cost that have to be paid in day to day bases
Variable costs do change with the level of out put!!
Fixed- f Variable- v
Rent- f
Electricity- v
Wages- v
Raw materials- v
Salaries- f
Deleviry cost- f
Stationary orders- f
Petrol for a taxi driver- v
Telephone line rental- f
Advertising- f
Direct cost- are directly linked to the output
Marginal cost- the extra costs a business will have to pay by producing one more unit of output
Average cost per unit- cost of production divided by total output
Total cost
Cash inflow: Money which is going into a business
Cash outflow: Money which is leaving the business to for items such
Revenue- money coming into the business. Selling products
Revenue= number of products sold x price
Costs- money going out of the business. E.g. salaries, rent, electricity/water
Profit- Money which is left over after all costs have been paid
P= R-C
A car manufacture
- Machinery
- Labour
- Land
- Utilities
- Raw materials
A school
- Labour
-Land
- Equipment
- Utilities
Capital expenditure: money spent on long-lived fixed assets such as premises, vehicles and equipment.
Operating Expenditure: money for running costs such as wages, rent, telephone and other charges.
Why do business need funds?
Other than start-up costs, why may a business need extra funds other than sales?
For advertising their brand and transporting goods. They would need to pay for other factors for example new shops, factory’s etc.
How do you decide which method of finance?
-Status and size of the business
- Track record and experience of management team
- Growth prospects and profitability
- Level of gearing
Costs the money going out of the business. 4 examples of costs:
- office visits
- drugs
- emergency room
Operating cost is the cost that have to be paid in day to day bases
Variable costs do change with the level of out put!!
Fixed- f Variable- v
Rent- f
Electricity- v
Wages- v
Raw materials- v
Salaries- f
Deleviry cost- f
Stationary orders- f
Petrol for a taxi driver- v
Telephone line rental- f
Advertising- f
Direct cost- are directly linked to the output
Marginal cost- the extra costs a business will have to pay by producing one more unit of output
Average cost per unit- cost of production divided by total output
Total cost
Cash inflow: Money which is going into a business
Cash outflow: Money which is leaving the business to for items such