Keywords Defintion
Profit Revenue minus Costs
Cash Notes, cash, coins, savings
Working Capital Cash needed to finance the day to day running of the business
Current Assets E.g. Stock Debtors. They are things that should be converted to cash within
12 months
Current Liabilities E,g, Trade Creditors. Money that is owed by the firm
Fixed Assets Expensive assets that the company owns. E.g. Buildings, machinery
Budgets A target for costs and sales
Variance Analysis Comparing actuals (costs and sales) with budgets
Favourable Performed better than expected
Adverse Performed worse than expected
Management by Exception If a firm sets many budgets, the manager will focus on the worst/most
adverse in the first instance
Cash Flow Forecasting Prediction of cash in and out of the business
Net Cash Flow Cash inflow minus Cash outflow
Liquidation If the firm is unable to pay debts it may be forced to liquidate assets
Liquidity The ability to turn assets into cash quickly
Debtor Someone who owes the company money
Creditor Someone the company owes money to
Cash Notes, cash, coins, savings
Working Capital Cash needed to finance the day to day running of the business
Current Assets E.g. Stock Debtors. They are things that should be converted to cash within
12 months
Current Liabilities E,g, Trade Creditors. Money that is owed by the firm
Fixed Assets Expensive assets that the company owns. E.g. Buildings, machinery
Budgets A target for costs and sales
Variance Analysis Comparing actuals (costs and sales) with budgets
Favourable Performed better than expected
Adverse Performed worse than expected
Management by Exception If a firm sets many budgets, the manager will focus on the worst/most
adverse in the first instance
Cash Flow Forecasting Prediction of cash in and out of the business
Net Cash Flow Cash inflow minus Cash outflow
Liquidation If the firm is unable to pay debts it may be forced to liquidate assets
Liquidity The ability to turn assets into cash quickly
Debtor Someone who owes the company money
Creditor Someone the company owes money to