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Questions and Answers
What is the primary objective of financial management in a business?
What is the primary objective of financial management in a business?
Which type of income is generated from non-core business activities?
Which type of income is generated from non-core business activities?
What is the primary purpose of cash flow management?
What is the primary purpose of cash flow management?
What type of expenditure remains the same even if the business produces more or less?
What type of expenditure remains the same even if the business produces more or less?
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What is the term for the income generated from the sale of goods and services?
What is the term for the income generated from the sale of goods and services?
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What is the term for reports that provide information about a company's financial performance and position?
What is the term for reports that provide information about a company's financial performance and position?
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Study Notes
Business Overview
- A business is an organization that operates to provide goods and services to customers in exchange for revenue.
- Businesses can be classified into different types, such as:
- Sole proprietorship
- Partnership
- Corporation
- Limited liability company (LLC)
Finance
- Financial Management: The process of planning, organizing, and controlling financial resources to achieve business objectives.
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Financial Statements: Reports that provide information about a company's financial performance and position, including:
- Balance Sheet
- Income Statement (Profit and Loss Statement)
- Cash Flow Statement
Income
- Revenue: The income generated from the sale of goods and services.
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Types of Income:
- Operating Income: Revenue generated from core business operations.
- Non-Operating Income: Revenue generated from non-core business activities, such as investments.
Expenditure
- Expenses: The costs incurred by a business to generate revenue.
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Types of Expenditure:
- Fixed Expenses: Costs that remain the same even if the business produces more or less, such as rent and salaries.
- Variable Expenses: Costs that vary depending on the level of production, such as raw materials and labor.
Cash Flow
- Cash Flow: The movement of money into or out of a business.
- Cash Flow Management: The process of managing cash inflows and outflows to ensure the business has sufficient liquidity to meet its financial obligations.
Profitability
- Profit: The difference between revenue and total expenses.
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Profitability Ratios: Measures used to evaluate a company's ability to generate earnings, such as:
- Gross Profit Margin
- Operating Profit Margin
- Net Profit Margin
Other Key Concepts
- Assets: Resources owned or controlled by a business, such as cash, inventory, and property.
- Liabilities: Debts or obligations that a business must pay or settle, such as loans and accounts payable.
- Stakeholders: Individuals or groups with an interest in the business, such as shareholders, customers, and employees.
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Description
Test your knowledge of business basics, including types of businesses, financial management, income, expenditure, cash flow, profitability, and more!
