Definitions 10

Question 0

Break-even

Answer 0

Where a business sells just enough to cover it’s costs

Question 1

Contribution

Answer 1

The amount of money left over after variable costs have been subtracted from revenue. The money contributes towards fixed costs and profit

Question 2

Break-even charts

Answer 2

A graph containing the total cost and total revenue lines, illustrating the break-even output

Question 3

Break-even output

Answer 3

The output a business needs to produce so that it’s total revenue and total costs are the same

Question 4

Break-even point

Answer 4

Where total revenue and total costs are the same

Question 5

Margin of safety

Answer 5

The range of output between the break-even level and the current level of output, over which a profit is made

Question 6

Cash flow

Answer 6

The continuous movement of cash in and out of a business

Question 7

Cash flow forecast

Answer 7

The prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month

Question 8

Liquid asset

Answer 8

An asset which is easily changed into cash

Question 9

Net cash flow

Answer 9

Cash inflows minus cash outflows over a period of time