Cash flow forecast Flashcards
What is a cash inflow?
When a sum of money comes into the business
What is a cash outflow?
When a sum of a money makes its way out of the business
What is the break even point?
It is the point where the business’ revenue is equal to the total costs
What are fixed costs?
They are costs which don’t change no matter how successful your business is
What are variable costs?
They are costs that can change anytime and affect your business
What are direct costs?
They are costs that are associated in the making of a product a business is trying to sell
What are indirect costs?
They are costs that are not associated the the making of the products a business is trying to sell
What is the formula for revenue?
Number of units sold x price per unit
What are running costs?
Costs that continually need to paid during the time the business is running
What are start up costs?
They are costs for products and items that are needed to start the business
What is the formula for profit?
Revenue - total costs
What is the margin of safety?
The amount by which sales would have to fall before the break even point is reached
What is the formula for total costs?
Fixed costs + variable costs
Name a benefit of a break even analysis?
It gives you an idea of how many products you need to sell in order to make a profit
Name a limitation of a break even analysis?
If the business sells more than one product then the break even point can be hard to calculate as each product will be more/less popular than the others.
