1.3.3 Cash & Cash Flow Flashcards
1
Q
How to find revenue?
A
Selling price * Units sold
2
Q
What is the point where total costs and total revenue cross called?
A
Break even output (BEO)
3
Q
Why is cash important to a business?
A
To pay off rent, loans, suppliers in order to remain solvent. Without cash the business would crumble because no raw materials could be imported.
4
Q
What is the line going upwards diagonally starting next to the fixed costs called?
A
Total costs
5
Q
What is the area between the BEO and the total revenue called?
A
Margin of safety
6
Q
How to calculate total costs
A
Variable costs (variable cost per unit * units) + fixed costs
