cost of materials the price paid by the business for the materials used in generating the sales revenue; also known as the costs of goods sold costs the expenses involved in making a product; some relate to the actual production of the product, others to running the business (e.g. wages and electricity) current financial position a calculation of what income someone has (money coming in) minus any regular expenses (money out) demographics characteristics relating to population, especially age, gender, ethnicity, employment, income and education expenses the regular outgoings of money (money out) that a person may have. This might include rent or a mortgage, grocery bills, energy bills, a loan repayment for a car, and medical bills. employer the person or business that pays workers for the work they do employees the people who make the product or provide the service to the customers. Employees have a massive effect on the outcome of the business. grosswage a person’s wage or salary before it is taxed by the government income the money that a person receives. This can consist of money earnt from employment such as a wage, but it also includes income from other sources. income statement tells a business owner whether the business has made a profit over a period. It does so by looking at the amount of money earned by selling goods and services, and the business’s costs. long-term goals are personal financial goals that you will want to accomplish in the future e.g. buying a house niche market a segment of buyers who have a unique need which is met by a business or seller who can supply products that satisfy that need. Buyers in a niche market may be looking for something different than the mainstream consumer. operating expenses are those costs which are encountered to run the business (such as wages, gas, electricity) pension your employer pays a percentage of your earnings into your superannuation account, and your superannuation fund invests (or grows) the money until you retire product development the creation of products with new or different characteristics that offer new or additional benefits to customers revenue refers to receipts, otherwise known as revenue, that occur when a business receives money; this is usually when a customer purchases something to come sales revenue the amount of money earned by selling goods and services short-term goals are things that we want to do within the next couple of months or even within the year; this might include a plan to buy something superannuation fund how much money a person has in their retirement fund. This will consist of the payments that the person has made from their income, combined with what their employer has contributed. superannuation or super is the term for retirement funds. Most working Australians pay into a super fund from their income (as wage or salary) and employers make similar regular contributions.
22.8.3 Reflection Complete the following to reflect on your learning.
Revisit the inquiry questions posed in the Overview: Why is financial planning, including budgeting and achieving personal financial objectives important? What financial decisions are businesses making? And how do they respond to a changing market? 1. Now that you have completed this topic, what is your view on these questions? Discuss with a partner. Has your learning in this topic changed your view? If so, how? 2. Write a paragraph in response to the inquiry questions, outlining your views.
TOPIC22 Financial goals and decision-making 657
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