BUSINESS DEFINITIONS

1.​ Consumer goods – the physical and tangible goods sold to the general public – include durable
consumer goods like cars and washing machines and non-durable goods like food, drinks and
sweets that can be used only once.
2.​ Consumer services – the non-tangible products sold to the general public. It includes hotel
accommodation, insurance services and train journeys.
3.​ Consumer – Individual who buys goods and services for their own use.
4.​ Customer – Individual, group of individuals or an organisation who purchase goods and
services from a business.
5.​ Factor of Production – Resources required by business to commence production of goods and
services.
6.​ Capital goods – the physical goods the industry uses to aid in producing other goods and
services, such as machines and commercial vehicles.
7.​ Adding value – increasing the difference between the cost of purchasing bought-in materials
and the price the finished goods are sold for.
8.​ Added value – the difference between the costs of purchasing bought-in materials and the price
the finished goods are sold for.
9.​ Opportunity cost – the benefit of the next most desired option given up.
10.​ Entrepreneur – someone who takes the financial risk of starting and managing a new venture.
11.​ Enterprise – Action of showing initiatives to take risk to start up a business.
12.​ Branding – Process of differentiating or making a product unique relative to competitors by
developing a symbol, name, image or trademark etc.
13.​ Multinational Business (MNC) – A business firm that has its head office in one nation, but
with operating branches, factories in other countries.
14.​ Intrapreneur – Employee of the business who takes direct responsibility for turning an
innovative idea into a profitable product or business venture.
15.​ Business Plan – Written documents that describes a business, its objectives, strategies, financial
forecast and the market it operates in.
16.​ Primary Sector Business Activity – Firms engaged in farming, fishing, oil extraction and all
other industries that extract natural resources so that they can be used and processed by other
firms.
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17.​ Secondary Sector Business Activity – Firms that manufacture and process products from
natural resources including computers, brewing, baking, and clothes-making and construction.
18.​ Tertiary Sector Business Activity – Firms that provide services to consumers and other
businesses such as retailing, transport, insurance, banking, hotels, tourism and
telecommunications.
19.​ Quaternary Sector Business Activity – Firms that provides information related services. It
includes R&D, ICT, computing, web designing and management consultancy, etc.
20.​ Public Sector – It comprises organisations accountable to and controlled by the central or local
government.
21.​ Private Sector – It comprises businesses owned and controlled by individuals or groups of
individuals.
22.​ Mixed Economy – Economic resources are owned and controlled by private and public sectors.
23.​ Free-Market Economy – economic resources are owned largely by the private sector with little
state intervention.
24.​ Command Economy – Economic resources are owned, planned and controlled by the state.
25.​ Sole Trader – A business in which one person provides the permanent finance and, in return,
has full control of the business and can keep all of the profits.
26.​ Partnership – A business formed by two or more people to carry on a business together, with
shared capital investment and, usually, shared responsibilities.
27.​ Limited Liability – The only liability or potential loss the shareholder has if the company fails
is the amount invested in the company, not the total wealth of the shareholder.
28.​ Unlimited Liability – Founder or Owners of the business bear full, legal responsibility for debt
of the business which can risk their personal assets.
29.​ Private limited company – A small to medium-sized business owned by shareholders who are
often members of the same family; this company cannot sell shares to the general public.
30.​ Share – A certificate confirming part ownership of a company and entitling the shareholder
owner to dividends and certain shareholder rights.
31.​ Shareholder – A person or institution owning shares in a limited company.
32.​ Public limited company – A limited company, often a large business, with the legal right to sell
shares to the general public. Prices are quoted on the national stock exchange.
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33.​ Public corporation – A business enterprise owned and controlled by the state-also known as
nationalised industry.
34.​ Memorandum of association – This states the name of the company, the address of the head
office through which it can be contacted, the maximum share capital for which the company
seeks authorisation and the declared aims of the business.
35.​ Articles of association – This document covers the internal working and control of the
business-for example, the names of the directors and the procedures to be followed at meetings
will be detailed.
36.​ Cooperative – Jointly owned business whose members operate it considering their mutual
benefits, to produce or distribute goods and services. E.g. Consumers' cooperative, Farmers'
cooperative and Workers' cooperative, etc.
37.​ Franchise – A business that uses the name, logo and trading systems of an existing successful
business.
38.​ Franchiser – Person or Business selling license containing rights of their brand image, name or
identity to someone who wants to open shops and sell products under that brand identity.
39.​ Franchisee – Person or Business purchasing license that contains rights to operate under,
usually a successful established brand.
40.​ Joint Venture – When two or more firms agree to work closely together on a particular project
and establish a completely separated business division to commence operation of that project.
41.​ Social Enterprise – A business with mainly social objectives that injects most of its profit back
into the business with aims based on societal welfare rather than profit motive. They following
the triple bottom line.
42.​ Triple Bottom Line – Three objectives of social enterprise:- Economic (Financial), Social and
Environmental.
43.​ Revenue – Total value of sales made during a certain time period of business operation.
44.​ Capital Employed – Total value of long-term finance invested into a business.
45.​ Market Capitalisation – Total value of issued shares of the business firm.
46.​ Market Share – Sales of a business as a proportion of total market sales.
47.​ Small Business – A business with a limited scale of operations. Its characteristics consist of
having fewer employees and lower revenue compared to large enterprises. Such businesses are
usually privately owned and operated.
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48.​ Family Business – A business where decision-making occurs with members of a family. It is
typically managed and controlled by family members across multiple generations, with family
interests influencing its operation and strategy.
49.​ Organic Growth – Expansion of a business by establishing new plants, stores, or factories. Also
known as internal growth.
50.​ External Growth – Expansion of a business through integration or takeover of another
business.
51.​ Merger – Agreement by owners and managers of two businesses to unite them together into a
new combined business. It's referred to as a friendly merger.
52.​ Takeover – When a company buys more than 50% of shares of another business and becomes
its owner. Also known as acquisition.
53.​ Horizontal Merger – Integration with a business in the same industry in the same stage of
production.
54.​ Vertical Integration – Integration with a business in the same industry in different stage of
production.
55.​ Backward Vertical Integration – Integration with a business in the same industry in the earlier
stage of production. It integrates with supplier business.
56.​ Forward Vertical Integration – Integration with a business in the same industry in the later
stage of production. It integrates with retailer business.
57.​ Conglomerate Integration – Integration with a business in a different industry in the different
stages of production.
58.​ Synergy – "The whole is greater than the sum of parts". It is usually assumed that combined
business organisations are more successful than its original separate entities.
59.​ Strategic Alliance – Agreement between two firms to commit resources to accomplish a certain
aim while retaining its independence from each other.
60.​ Business Objectives – A stated measurable target of the business written in its business plan
that it hopes to achieve.
61.​ Corporate Social Responsibility (CSR) – When businesses take interest of the society in
consideration, and by taking accountability for the impact of their decisions and activities on
various stakeholders as well as the environment.
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62.​ Pressure Group – An association created by a group of individuals with a common interest or
goal, thus putting pressure on corporations and government to change specific policies so that
their aim is achieved. It is usually for the betterment of society.
63.​ SMART Objectives – Aims that are specific, measurable, achievable, realistic and time-limited.
64.​ Annual (Company) Report – Document containing details of a firm's activities over a year,
including its financial accounts.
65.​ Business Strategy – Long-term plan consisting steps of action of a business, tailored to achieve
a specific objective.
66.​ Tactic – Short-term plan of action which is a part of the overall strategy to achieve its main aim.
67.​ Target – Short-term objective of the corporation that must be completed in order to achieve
their overall objective.
68.​ Ethical Code (Code of Conduct) – Document detailing company's rules and guidelines on
employee behaviour that must be followed by all the workers.
69.​ Stakeholders – Individuals or groups who can be affected by, and have an interest in, any action
taken by an organisation.
70.​ External Stakeholders – Individuals or groups who are separate from the business but are
affected by or interested in its operations.
71.​ Internal Stakeholders – Individuals or groups who work within the business, or own it, and are
affected by the operations of the business.
72.​ Trade Union – Organisations of working people with the objective of improving the pay and
working conditions of its members and providing them with support and legal services.
73.​ Stakeholder Concept – The view that businesses and their managers have responsibilities to a
wide range of groups, not just shareholders. Also known as stakeholder theory.
74.​ Human Resource Management (HRM) – The strategic approach to managing employees so
they help the business succeed.
75.​ Workforce Planning – Predicting how many workers and what skills will be needed to meet
company goals.
76.​ Workforce Audit – Checking the skills and qualifications of current employees and managers.
77.​ Labour Turnover – The rate at which employees leave a company.
78.​ Recruitment – Finding and attracting people to fill a job position.
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79.​ Selection – The steps taken to interview, test, and choose the right candidate for a job.
80.​ Recruitment Agency – A business that helps companies find candidates for job openings.
81.​ Job Description – A list of the main tasks and responsibilities of a job.
82.​ Person Specification – A list of the skills, qualities, and qualifications needed for a job.
83.​ Curriculum Vitae (CV) – A detailed document showing a person’s education, work experience,
and achievements.
84.​ Resume – A shorter document summarizing work experience, education, and skills relevant to
the job.
85.​ Reference – A recommendation or comment about an applicant’s character or past work
performance.
86.​ Assessment Centre – A place where job candidates are tested on their abilities to perform a
role.
87.​ Internal Recruitment – Filling a job from within the current employees of the business.
88.​ External Recruitment – Hiring someone from outside the company for a job.
89.​ Employment Contract – A legal document outlining the terms of a worker’s job.
90.​ Redundancy – When a job is no longer needed, and the employee is let go.
91.​ Dismissal – Being fired from a job due to poor performance or breaking rules.
92.​ Unfair Dismissal – Being fired for a reason that is not legally justified.
93.​ Employee Morale – The overall mood and satisfaction of employees at work.
94.​ Employee Welfare – The health, safety, and wellbeing of employees in the workplace.
95.​ Work-Life Balance – Managing time and effort between work and personal life.
96.​ Equality Policy – Rules to ensure everyone is treated fairly and has equal opportunities.
97.​ Diversity Policy – Policies to create a diverse workforce and value differences.
98.​ Training – Work-related education to improve skills and efficiency.
99.​ Induction Training – Training to introduce new employees to the company and its systems.
100.​ On-the-Job Training – Training given at the workplace while doing the job.
101.​ Off-the-Job Training – Training done away from the workplace.
102.​ Multi-skilling – Training employees in multiple skills for more flexibility.
103.​ Employee Appraisal – Evaluating an employee’s performance based on set goals.
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104.​ Industrial Action – Workers taking action to pressure management during a dispute.
105.​ Collective Bargaining – Negotiating working conditions between a group of employees who
are usually represented by trade union officials and their employer.
106.​ Trade Union Recognition – When a company agrees to negotiate with a trade union instead of
individual workers.
107.​ Motivation – The internal and external factors that stimulate the desire in workers to stay
interested in and committed to doing a job well.
108.​ Self-Actualisation – A sense of self-fulfillment achieved through learning and
accomplishments.
109.​ Job Enrichment – Using the full capabilities of workers by giving them more challenging and
fulfilling tasks.
110.​ Piece Rate – Payment to a worker for each unit produced.
111.​ Time-Based Wage Rate – Payment made to a worker for each period of time worked.
112.​ Salary – Annual income, typically paid monthly.
113.​ Commission – Payment to a salesperson for each sale made.
114.​ Bonus – An additional payment on top of the agreed wage or salary.
115.​ Performance-Related Pay – A bonus scheme that rewards employees for above-average work
performance.
116.​ Profit Sharing – A bonus given to employees based on company profits, usually as a proportion
of their salary.
117.​ Share-Ownership Scheme – A program that gives employees shares in the company or allows
them to buy shares at a discount.
118.​ Fringe Benefits – Additional perks given by an employer, separate from regular pay.
119.​ Job Rotation – A system where employees switch between different jobs.
120.​ Job Enlargement – Expanding a job by broadening or deepening the tasks undertaken.
121.​ Job Redesign – Restructuring a job to make it more interesting, satisfying, and challenging.
122.​ Development – Gaining new or advanced skills and knowledge, with opportunities to apply
them.
123.​ Employee Participation – Actively involving employees in decision-making within the
company.
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124.​ Teamworking – Organizing production so groups of workers complete entire units of work
together.
125.​ Empowerment – Providing employees with the skills, resources, authority, and opportunities to
make decisions and be responsible for their work.
126.​ Quality Circle (QC) – A voluntary group of workers who meet regularly to discuss and solve
work-related problems.
127.​ Manager – The person responsible for setting goals, organizing resources, and motivating
workers to achieve business objectives.
128.​ Management – The coordination and organization of activities to accomplish the business's
defined goals.
129.​ Autocratic Management – A style where one manager makes all decisions with little to no
input from others.
130.​ Paternalistic Management – A style where the manager assumes they know what is best for
the organization, similar to a parental figure.
131.​ Laissez-Faire Management – A style where most business decisions are left to the workforce.
132.​ Democratic Management – A style that encourages workers to actively participate in
decision-making.
133.​ Theory X – The belief that some managers hold, thinking employees are lazy, need constant
supervision, and are motivated by fear.
134.​ Theory Y – The belief that some managers hold, thinking employees are self-motivated, enjoy
their work, and are willing to take on extra responsibilities.
135.​ Marketing Objectives – The goals set for the marketing department to help the business
achieve its overall company objectives.
136.​ Marketing – The management task of identifying and satisfying customer needs profitably by
delivering the right product at the right price, place, and time.
137.​ Corporate Objectives – Clear and realistic goals set for the entire company.
138.​ Marketing Strategy – A detailed plan of action that outlines how a business will achieve its
marketing goals and gain a competitive advantage.
139.​ Equilibrium Price – The price at which the quantity demanded by consumers equals the
quantity supplied by producers.
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140.​ Demand – The amount of a product that consumers are willing and able to buy at a specific
price during a certain time period.
141.​ Supply – The amount of a product that businesses are willing to offer at a specific price during a
certain time period.
142.​ Market Segment – A smaller group within a larger market where consumers share similar
characteristics.
143.​ Industrial Market – The market for products sold by businesses to other businesses (B2B).
144.​ Consumer Market – The market for products sold by businesses to individual consumers
(B2C).
145.​ Customer/Market Orientation – An approach that focuses on making product decisions based
on consumer demand identified through market research.
146.​ Product Orientation – An approach that focuses on producing products that a company can
make or has traditionally made, and then trying to sell them.
147.​ Market Size – The total value or volume of sales in a market over a specific time period.
148.​ Market Growth – The percentage increase in the total market size (by volume or value) over a
given period.
149.​ Brand Leader – The brand with the largest market share.
150.​ Consumer Products – Goods or services sold directly to end users.
151.​ Industrial Products – Goods or services sold to other businesses.
152.​ Mass Marketing – Selling standardized products to the entire market without differentiation.
153.​ Niche Marketing – Identifying a small segment of a larger market and offering products
tailored specifically to that segment.
154.​ Market Segmentation – Dividing a market into distinct customer groups with common needs
and marketing different products to each group.
155.​ Consumer Profile – A detailed picture of a business's consumers, showing their age, income,
location, gender, and social class.
156.​ Customer Relationship Marketing (CRM) – Using marketing strategies to build strong
relationships with customers, ensuring loyalty and repeat business.
157.​ Market Research – The process of gathering, recording, and analyzing information about
customers, competitors, and the market.
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158.​ Primary Research – Collecting original, first-hand data directly related to the business’s needs.
159.​ Secondary Research – Using existing data that was collected for a different purpose.
160.​ Qualitative Data – Non-numerical data that gives insight into the motivations and behaviors of
consumers.
161.​ Quantitative Data – Numerical data from research that can be analyzed statistically.
162.​ Sampling – Selecting a group of respondents from a larger population for research purposes.
163.​ Sample – A selected group of people participating in market research, representing the broader
target market.
164.​ Sampling Bias – When the chosen sample doesn’t accurately represent the entire population,
giving some people a higher chance of being selected.
165.​ Arithmetic Mean – The average value calculated by adding up all the data points and dividing
by the number of points.
166.​ Mode – The value that appears most frequently in a data set.
167.​ Median – The middle value in an ordered set of data, dividing it into two equal halves.
168.​ Range – The difference between the highest and lowest values in a data set.
169.​ Coding – The process of labelling and organising qualitative data to identify the main themes
and the links between them.
170.​ Marketing Mix – The four key decisions—product, price, promotion, and place—that ensure
effective marketing of a product.
171.​ Product – Goods or services created during the production process and sold to meet customer
needs.
172.​ Goods – Physical products like cars or soap bars.
173.​ Services – Non-physical products that fulfill customer needs, like teaching, plumbing, or
banking.
174.​ Brand – A unique name, symbol, or trademark that distinguishes a product from its competitors.
175.​ Intangible Attributes – Qualities of a product that are based on customer opinions and are
difficult to measure or compare.
176.​ Tangible Attributes – Measurable features of a product that can easily be compared with
others.
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177.​ Unique Selling Point (USP) – A distinctive feature of a product that sets it apart from
competitors.
178.​ Product Differentiation – The unique qualities of a product that make it stand out from
competitors.
179.​ Product Positioning – How consumers perceive a product compared to its competitors.
180.​ Product Portfolio Analysis – Reviewing a business’s range of products to decide how best to
allocate resources.
181.​ Product Life Cycle – The stages of a product's sales from launch to withdrawal from the
market.
182.​ Consumer Durable – A product designed for reuse with a long lifespan, like a car or washing
machine.
183.​ Extension Strategy – A plan to extend the maturity phase of a product’s life before launching a
new one.
184.​ Boston Matrix – A tool for analyzing a company’s product range in terms of market share and
growth.
185.​ Mark-Up Pricing – Adding a fixed profit margin to the cost of a product to set its price.
186.​ Cost-Plus Pricing – Setting a price by calculating the unit cost and adding a set profit margin.
187.​ Contribution-Cost Pricing – Pricing based on variable costs to contribute to fixed costs and
profit.
188.​ Competitive Pricing – Setting prices based on what competitors are charging.
189.​ Price Discrimination – Charging different prices to different customer groups for the same
product or service.
190.​ Dynamic Pricing – Adjusting prices based on demand and customers’ willingness to pay.
191.​ Penetration Pricing – Setting a low price to encourage high sales volume.
192.​ Price/Market Skimming – Charging a high price for a new product with low price sensitivity
due to uniqueness.
193.​ Psychological Pricing – Setting prices to align with customers’ perceived value of a product.
194.​ Promotion – The use of various methods like advertising, sales promotions, personal selling,
direct mail, trade fairs, sponsorships, and public relations to inform and persuade consumers to
make a purchase.
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195.​ Advertising – Paid communication using platforms such as TV, newspapers, and cinemas to
inform and convince customers.
196.​ Direct Promotion – A variety of promotional efforts targeting specific consumers directly, often
referred to as direct marketing.
197.​ Sales Promotion – Offering special deals and incentives to consumers or retailers to boost
short-term sales and encourage repeat purchases.
198.​ Promotion Mix – The blend of promotional strategies a company uses to market its products.
199.​ Digital Promotion – Marketing and promoting products using digital platforms, primarily on
the internet but also via mobile devices.
200.​ E-commerce – Conducting transactions for buying and selling goods and services through
online platforms.
201.​ Channel of Distribution – The network of intermediaries that a product goes through from the
producer to the final consumer.
202.​ Online Marketing (E-commerce) – Using the internet, email, and mobile communications for
selling and marketing products directly through electronic commerce.
203.​ Digital Distribution – The delivery of digital media content such as music, videos, software,
and games over the internet.
204.​ Physical Distribution – The processes involved in moving finished products efficiently from
the production facility to the consumer.
205.​ Integrated Marketing Mix – Ensuring that all marketing decisions and strategies align with
one another to deliver a clear and consistent message to consumers about the product.
206.​ Intellectual Capital – The intangible assets of a business, including human capital (skilled
employees), structural capital (information systems and databases), and relational capital (strong
relationships with suppliers and customers).
207.​ Transformational Process – Activities that convert inputs into outputs, adding value during the
process to produce goods or services for customers.
208.​ Productivity – The measure of output generated from a given set of inputs, such as output per
worker over a specific time period.
209.​ Level of Production – The total number of units produced within a certain time frame.
210.​ Production – The process of turning inputs, like raw materials and labor, into finished products
or services.
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211.​ Efficiency – The ability to produce outputs at the highest ratio of output to input.
212.​ Effectiveness – Achieving business goals by utilizing inputs in a way that meets customer needs
and business objectives.
213.​ Sustainability of Operations – Maintaining business practices over the long term by ensuring
environmental protection and preserving the quality of life for future generations.
214.​ Labour Intensive – A production process that requires a high amount of labor compared to the
use of capital equipment.
215.​ Capital Intensive – A production process that relies heavily on machinery and equipment rather
than labor input.
216.​ Job Production – The creation of a unique product that is specifically designed to meet an
individual customer's needs.
217.​ Batch Production – Producing a set of identical items in groups, where each product passes
through stages of production simultaneously.
218.​ Flow Production –Continuous production where products are made in an ongoing process
without interruption.
219.​ Mass Customisation – The use of advanced, flexible technology in production lines to create
personalized products according to individual customer preferences.
220.​ Inventory – Materials and goods that a business keeps on hand to enable production and meet
customer demand.
221.​ Inventory Management – The process of managing the ordering, storage, and use of a
company's inventory.
222.​ Economic Order Quantity – The most cost-effective quantity of stock to reorder, balancing
delivery and storage costs.
223.​ Buffer Inventory – The minimum amount of stock that must be kept to ensure uninterrupted
production in case of supply delays or sudden increases in demand.
224.​ Re-order Quantity – The number of units ordered every time a new stock order is placed.
225.​ Lead Time – The duration between placing an order for supplies and receiving the delivery.
226.​ Re-order Level – The inventory level at which a new order is triggered to avoid running out of
stock.
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227.​ Supply Chain – The interconnected system of businesses and activities involved in the
production and distribution of a product, from raw materials to the final delivery to the
customer.
228.​ Supply Chain Management – Managing the entire process from sourcing raw materials to
delivering the finished product, aiming to minimize costs while improving customer service.
229.​ Just-in-Time (JIT) Inventory Management – A strategy that avoids holding stock by ensuring
materials arrive just as needed for production and that finished goods are made to order.
230.​ Just-in-Case (JIC) Inventory Management – A strategy that reduces the risk of stock
shortages by maintaining higher levels of buffer inventory.
231.​ Maximum (Full) Capacity – The highest level of output a business can consistently achieve
over time.
232.​ Capacity Utilisation – The percentage of the maximum output capacity that is currently being
used.
233.​ Outsourcing – Hiring another business to handle part of the production process instead of doing
it in-house with the company's employees.
234.​ Excess Capacity – It occurs when current output levels are lower than the business's full
production capacity, also called spare capacity.
235.​ Rationalisation – The process of cutting capacity by shutting down factories or production
units.
236.​ Capacity Shortage – When the demand for a company's products surpasses its production
capacity.
237.​ Business Process Outsourcing (BPO) – A type of outsourcing where specialized contractors
manage specific business functions like human resources or finance.
238.​ Start-up Capital – The initial capital required by an entrepreneur to establish a business.
239.​ Working Capital – Funds needed to cover raw materials, day-to-day expenses, and credit
extended to customers.
240.​ Short-term Finance – Finance needed for periods of up to one year.
241.​ Long-term Finance – Finance required for periods longer than one year.
242.​ Profit – The surplus remaining after all costs have been subtracted from total revenue.
243.​ Liquidity – The ability of a business to meet its short-term financial obligations.
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244.​ Administration – When external administrators manage a business that cannot pay its debts,
with the intention of selling it as a going concern.
245.​ Bankruptcy – A legal procedure that involves liquidating a business or property to pay off
debts.
246.​ Liquidation – When a business stops trading and sells its assets to pay creditors.
247.​ Current Assets – Assets that are cash or can be converted to cash within a year, such as
inventory or trade receivables.
248.​ Current Liabilities – Debts or obligations that are due to be paid within one year.
249.​ Capital Expenditure – The purchase of long-term assets, like machinery or buildings, expected
to last for more than one year.
250.​ Revenue Expenditure – Spending on operational costs and short-term assets, such as wages
and inventory.
251.​ Retained Earnings – Profit kept in the business after taxes, rather than being paid out as
dividends.
252.​ Internal Sources – Finance raised from within the business, such as from retained earnings or
the sale of assets.
253.​ External Sources – Finance raised from outside the business, such as loans or investments from
banks.
254.​ Non-current Assets – Long-term assets held and used by the business for more than one year.
255.​ Overdraft – A pre-arranged credit limit with a bank that allows a business to borrow money as
needed.
256.​ Factoring – Selling accounts receivable to a third party in exchange for immediate cash.
257.​ Hire Purchase – A method of buying an asset with fixed payments over time, with ownership
transferred after the final payment.
258.​ Leasing – Renting an asset for a fixed period, avoiding the need for long-term capital to
purchase the asset outright.
259.​ Long-term Loans – Loans that do not need to be repaid for at least one year.
260.​ Debentures – Long-term bonds issued by companies to raise finance, often with a fixed interest
rate.
261.​ Share (Equity) Capital – Permanent finance raised by selling shares in the business.
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262.​ Business Mortgages – Long-term loans secured against a property used for business purposes.
263.​ Venture Capital – Risk capital invested in start-ups or small businesses with high growth
potential.
264.​ Collateral Security – An asset pledged to a lender that may be sold to repay a loan if the
borrower defaults.
265.​ Rights Issue – An offer to existing shareholders to purchase additional shares at a discounted
price.
266.​ Microfinance – Financial services provided to individuals or small businesses who lack access
to traditional banking services.
267.​ Crowdfunding – Raising small amounts of capital from a large number of people to finance a
new business or project.
268.​ Cash Flow – The net balance of cash moving into and out of a business.
269.​ Insolvent – When a business cannot meet its short-term debts.
270.​ Cash Flow Forecast – An estimate of future cash inflows and outflows.
271.​ Cash Inflow – Money in form of note received by a business.
272.​ Cash Outflow – Money in the form of cash spent by a business.
273.​ Net Cash Flow – The difference between cash inflows and outflows over a given period.
274.​ Opening Cash Balance – The amount of cash a business holds at the beginning of a period.
275.​ Closing Cash Balance – The amount of cash held at the end of a period, which becomes the
opening balance for the next period.
276.​ Credit Control – Monitoring customer debts to ensure they are paid within the agreed time
frame.
277.​ Bad Debt – Unpaid bills that are unlikely to be collected.
278.​ Overtrading – Expanding a business too quickly without sufficient finance, leading to cash
flow problems.
279.​ Cost Centre – A department or section of a business that incurs costs but does not generate
revenue.
280.​ Direct Costs – Costs directly linked to the production of goods and services.
281.​ Indirect Costs – Costs that cannot be directly allocated to a specific unit of production.
282.​ Fixed Costs – Costs that remain unchanged regardless of output in the short term.
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283.​ Variable Costs – Costs that vary depending on the level of output.
284.​ Total Cost – The sum of fixed and variable costs.
285.​ Profit Centre – A division of a business to which both revenues and costs are assigned,
allowing profit calculation.
286.​ Average Cost – The total cost divided by the number of units produced.
287.​ Full Costing – A costing method that assigns all direct and indirect costs to products or
divisions.
288.​ Contribution Per Unit – The price of a product minus its variable costs.
289.​ Break-even Point – The output level at which total revenue equals total costs, resulting in
neither profit nor loss.
290.​ Break-even Analysis – The process of calculating the break-even point using cost and revenue
data.
291.​ Margin of Safety – The difference between actual output and the break-even output level.
292.​ Budgeting – Planning future financial activities by setting performance targets.
293.​ Budget Holder – The individual responsible for setting and managing a budget.
294.​ Variance Analysis – The process of comparing actual results to the budgeted figures and
analyzing the differences.
295.​ Delegated Budgets – Budgets for which junior managers are given responsibility for setting and
achieving targets.
296.​ Incremental Budgeting – A budgeting method that uses the previous year's budget as a starting
point, with adjustments for the current year.
297.​ Zero Budgeting – A budgeting method where every expense must be justified, and no funds are
allocated automatically.
298.​ Favourable Variance – A change from the budget that results in higher-than-expected profit.
299.​ Flexible Budgeting – A budgeting approach that allows for cost adjustments if sales or output
levels change.
300.​ Adverse Variance – A change from the budget that results in lower-than-expected profit.