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Buss 1 Key Terms

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BUSS1 Key Terms
Adding value
A process through which a business increases the worth of the resources included in production so that customers perceive the product to be worth more than the cost of the inputs
Advisor
An external contact of a business that provides support and advice, sometimes for free
Bank loan
A fixed amount loan from a bank which is generally used to finance long-term assets
Bank overdraft
Borrowings from a bank on a current account which are payable on demand
Breakeven point
The point at which the total sales of a business equal total costs -i.e. the business is making neither a profit nor a loss
Budget
A detailed plan of income and expenses expected over a certain period of time
Business plan
A detailed description of a new or existing business, including the company’s strategy, aims and objectives, marketing & financial plan
Business objective
A stated goal or target of a business (note: a business can have more than one objective!)
Cash flow
The movements of cash into (“inflows”) and out of (“outflows”) a business
Cash flow forecast
A projection, usually by week or month, of the likely cash inflows and outflows in a business
Contribution
The difference between total sales and total variable costs
Contribution per unit
A key number for breakeven analysis: the difference between selling price per unit and variable cost per unit.
Costs
Amounts incurred by a business as a result of its trading operations
Demand
The amount of a product or service that customers are willing and able to pay at a given time
Demographic
Defining a market in terms of social-economic factors such as segmentation age, income, class etc
Elasticity of demand
The responsiveness of demand to a change in price or incomes
Electronic market
A market in which buyers and sellers are brought together using digital means of communication (e.g.

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