Breaking Even & Measruing Efficiency

Question 1

Net cash flow (equaution)

Answer 1

Cash inflow - cash outflow

Question 2

Mark up equation

Answer 2

(Gross profit / cost ) x100

Question 3

What is capital

Answer 3

The money used to build, run or grow a business

Question 4

Return on capital meaning and equation

Answer 4

A ratio that can be used to assess a company’s profitability and capital efficiency

(Profit/ capital employed) x100

Question 5

Capital employed meaning

Answer 5

The total amount of capital invested in a business for the purpose of generating profits

Question 6

Contribution per unit

Answer 6

SP - VC

Question 7

Selling price per unit ( it would normally be included in the question but not always )

Answer 7

Total revenue / number of sold items

Question 8

How to reduce break even point

Answer 8

-decreasing the fixed cost / expenses
-reduce variable cost/ expenses per unit
- increase selling price

Question 9

Trade payable

Answer 9

Trade payables / credit purchases x365

Question 10

Inventory turnover ratio

Answer 10

Cogs / Average inventory x365

Question 11

COGS formula

Answer 11

Opening inventory + purchases - closing inventory