12 - Break-Even And Cash Flow Forecasts Flashcards
What are 3 advantages of break-even analysis?
Can identify high costs
Informs the right prices to charge to customers
Easy way to calculate profit/loss
What are 3 disadvantages of break-even analysis?
Doesn’t include cost/selling price variations
Forecasted sales may not be achieved
Targets could be too high
What are the 4 categories of business costs?
Variable costs
Semi-variable costs
Fixed costs
Total costs
What are the 5 categories of sales?
Total revenue Total sales Selling price per unit Sales in value Sales in volume (units)
What are 3 advantages of a cash flow forecast?
Encourages planning
Cash flow can be monitored
Can be used to raise finance
What are 3 disadvantages of a cash flow forecast?
May be inaccurate
Can’t plan for unexpected events
Time-consuming to produce accurately
What are 2 problems that could be identified with a cash flow forecast?
Outflows could be greater than inflows
Fluctuations in cash flow
What are 3 solutions that could solve a negative cash flow?
Overdraft arrangements
Negotiations with creditors
Rescheduling capital expenditure
What are cash sales an example of?
Cash inflows
What are credit sales an example of?
Cash inflows
What are loans an example of?
Cash inflows
What is capital introduced an example of?
Cash inflows
What are asset sales an example of?
Cash inflows
What is bank interest received an example of?
Cash inflows
What are cash purchases an example of?
Cash outflows
