break-even & cash-flow forecasts

Question 1

break-even

Answer 1

-where a business isn’t making profit or loss
-the money received from sales=the money spent on costs

Question 2

variable costs

Answer 2

-costs that change with the level of output
-e.g. raw materials

Question 3

semi-variable costs

Answer 3

-part of the cost stays the same and part varies in relation to the degree of business activity
-e.g. a worker paid a fixed rate of pay but in addition may receive variable amounts of overtime.

Question 4

fixed costs

Answer 4

-costs that do not vary with output. They remain the same
-e.g. rent

Question 5

cash-flow forecast

Answer 5

-tries to predict the cash flowing into and out of a business
-a healthy cash flow is crucial to the survival of a business

Question 6

liquidity

Answer 6

measures a firm’s ability to meet short-term cash payments