How to the Understand Business Finance Understand the Business Cycle Manage Your Assets Measure Business Performance Sunday Times Creating Success_1

Tiếng Anh Tài khoản nợ Ngân sách khấu hao Khách nợ cổ tức vốn cổ phần Bao thanh toán Chi phí cố định Quỹ dòng chảy chuẩn chi phí gián tiếp lợi nhuận gộp tỷ lệ nội bộ (IRR) Các khoản cho vay dự trữ Lợi nhuận Lợi nhuận Lợi nhuận trên doanh thu bán hàng Cổ phần Chứng khoán chi phí biến đổi tiếng Anh-Mỹ Báo cáo tài chính
Nội dung trích xuất từ tài liệu:
How to the Understand Business Finance Understand the Business Cycle Manage Your Assets Measure Business Performance Sunday Times Creating Success_18 How to Understand Business FinanceTable 1.1 Common terms in English and US English English US English Other Accounts Financial statements Books Budget Business plan Operational plan Creditors Payables Accounts payable Debtors Receivables Accounts receivable Depreciation Amortization Dividend Drawings Equity Owners’ funds Factoring Cash discounting Fixed costs Expenses Burden, overheads Funds flow Cash flow statement Gearing Leverage Gross margin Gross profit Contribution Indirect costs Sales, general and administration (SG&A) Internal rate of return (IRR) DCF yield Loans Debt Net profit Net income Profit Earnings Profit and loss account Income statement Reserves Retained earnings Return on sales Return on revenue Sales Revenue Income, top line, invoice value Shares Stock Stock Inventory Variable cost Fluctuating cost Cost of goods sold (COGS)9 2 The business cycle Setting up a companyBusinesses differ to such a huge degree that each one is trulyunique, and yet they all go through one simple process in muchthe same way. We will call it the business cycle. They produce anddeliver a product or service, they invoice the customer, they paytheir bills, they get paid by their customers, and they do the books.We are going to set up an imaginary company to demonstrate thisprocess. The business is represented visually in Figure 2.1. Let’s take a look at our business. First, we’re going to rentan industrial unit. This can accommodate up to fourproduction units and the rent will be the same whether we haveone unit or four. We’d like to have some cash in this business. In reality thiswould be held in a bank account (or in your back pocket if youwere a market trader!) but we’ll have a cash box on our premisesto place this cash in. Do we want to have a lot or only a littlemoney in this cash box? Already we see a potential argumentbrewing between departments, so let’s come back to thisquestion in a later chapter.10 How to Understand Business Finance 90 DAYS 60 DAYS 30 DAYSFigure 2.1 An imaginary business start-upNext we’ll have an area representing the money owed to us bycustomers. As you can see, we may have given our customers 30,60 or 90 days to pay us and there is a box for each in our premises.When we deliver goods we invoice our customers and dependingon the payment terms the money they pay should reach us in 30,60 or 90 days. We can count that money but we can’t have it yet!Month by month this money will move along, ever closer, untileventually it will come into the cash box – and only then can wespend it! Underneath cash we have a ‘repay’ box. When anything hitsthis area we have to pay it from cash. If we don’t have any cash wemust find some or we are bankrupt. Never mind how much profityou are making, no cash means a bankrupt business. On one side of this repay box we have the credit we can getfrom suppliers after we have been trading for some time andhave established a track record. On the other side we have bankloans – again, once we have a track record and provided we11 The Business Cyclemeet the rules laid down by the banks we may be able to borrowfrom them. Lastly, down the right-hand side we have various costsassociated with running the business – rent, wages,administration overheads etc. What would you need to start a new business? At the very minimum you would need: • An idea – a product or service. What is it you will be able to charge customers for (ie make a sale and issue an invoice)? • Money – this is intentionally vague but you’ll need some sort of funding. • A plan – are you going to set up in your back room, rent an office, DIY or hire staff etc? The better your plan, the more likely your business is to survive and succeed.Let’s say our idea is to go into business installing white burglaralarms. We’re going to buy in the white burglar alarm system andwe will charge people to install it in their homes. Next we’ll need some money. Let’s represent this in greycasino chips – each chip being worth £1,000. We’ll say that asowners of this company we’ll put in £30,000 to start up thebusiness. This is represented by 30 grey casino chips which wewill place in cash, as shown in Figure 2.2.12 How to Understand Business FinanceFigure 2.2 Cash for the business The Moving Balance Sheet®We’re now going to invest this £30,000 in the business. We willwant to keep track of where we spend this money; at least, ouraccountant will. We’ll start a table recording what we have in thebusiness and where the money came from. Obviously these twothings should always balance (ie be the same), or else we couldjust give up working and ‘cook the books’ whenever we want a bitof cash to spend – while it lasts. This is shown in Table 2.1. To install these white burglar alarms we are going to needsome equipment – a van, ladders, tools etc, and we’ll say this willcost us £5,000. So we’ll buy this equipment and install it in ourindustrial unit. To pay for this we take ...