2 Profit Maths Flashcards
Includes 2.1 Cashflow and 2.3 stuff
What is cashflow
THe money flowing in and out of the business
What does a positive cashflow mean?
Profit
What can cashflow help highlight
Times where the firm may be short of liquidity
What are some cash inflows?
Cash sales
Trade Recievables
Any source of finance
What are some examples of cash outflows?
Raw Materials
Bills
Staff
Repayments
How to calculate cash inflow?
Cash inflow from sales + other sources of cash
How to calculate cash outflows?
Raw materials + waages + rent + other items of cash spending
How to calculate net cash flow
Cash inflows - Cash outflows
How to calculate opening balance
Firms cash holding at the begining of the time period. (Last months closing balence)
Closing cash balance
Opening cash balance + net cash flow
What does a negative closing balence mean?
A need for extra finance or organising an overdraft
What does the net cash flow show
How well each month is expected to go
limitations of cash flow forecasting
Changes in the economy
Changes in consumer trends
Innacurate market research
Competition
Uncertainty
Are all things that can effect a cassh flow forecasts reliability
What 3 types of profit are their?
Gross profit
Operating profit
Net profit
WHat is gross profit?
Profit after deducting variable cost from total revenue
What is operating costs
Profit after deducting variable costs and fixed costs from total revenue
Whats profit for the year (net profit)
Profit after deducting all the costs away from total revenue
How to calculate sales revenue
Money coming in from sales:
Quanitity sold * selling price
How to calculate cost of sales
Variable costs, any cost directly linked to the production
What are other operating expensises?
Fixed costs, costs that stay the same regardless of output
What is an exceptional items
Unsually large, infrequent costs
How to calculate profit margins
(gross/ operating/ net) profit / revenue) * 100
