Average Rate of Return (ARR)  - A method of measuring and comparing the profitability of an investment over the life of the investment , Break-Even Forecast - A prediction about the break-even quantity based on estimates of future sales revenues and costs , Break-Even Quantity - The amount a business must sell to earn enough revenue to just cover its costs so that it does not make a profit nor a loss , Cash  - Not simply notes and coins held in the business, but also money in a bank account , Cash Flow Forecast  - A statement showing the expected flow of money into and out of a business over a period of time , Closing Balance  - The amount of cash left at the end of the month. This becomes the opening balance at the start of the next month , Crowdfunding  - Money raised through an appeal to the public , Expenditure  - Money that the business pays out , Expenses  - The costs of operating a business , Fixed Costs  - The costs that stay the same as output changes, for example, rent , Gross Profit  - Sales minus the cost of sales , Gross Profit Margin  - Gross profit divided by sales multiplied by 100 , Interest  - The amount of money that has to be paid on borrowed money , Income  - Money that the business receives , Liquidity  - The ability of a business to pay its short-term debts which must be paid in the near future , Loans  - The sums borrowed for a certain period at an agreed rate of interest , Loss  - Occurs in a business when costs are greater than revenue , Margin of Safety  - The amount by which a business’ actual output is greater than its break-even output , Negative Cash Flow  - When during one month, more cash is flowing out of the business than flowing in , Net Cash Flow  - The total inflow minus total outflow , Net Profit  - Gross profit minus the expenses of operating the business , Opening Balance  - The amount of cash available at the beginning of the month that was the closing balance at the end of the previous month , Overdraft  - An arrangement with a bank that a business can spend more money than it has in its account , Owners’ Capital  - Money from savings put in to the business by the owner , Positive Cash Flow  - When, during one month, more cash flow is flowing into the business than is flowing out of it. , Profit  - The revenue received by a business minus the costs of running the business , Retained Profit - Profit that is not distributed to shareholders as dividend, Revenue - The money from sales, Variable Costs - The costs that change as output changes, for example, wages, Trade Credit - When the business has the goods to sell and agrees to pay at some time later,

Unit 5 - All Key Terms

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