Finance Flashcards
Break even point formula
fixed costs/ (sales revenue- variable costs)
Revenue formula
Quantity x selling price per unit
Total costs formula
Fixed costs + variable costs
Total variable costs formula
Quantity x variable cost per unit
Gross profit formula
Revenue - Cost of sales
Net profit formula
Gross profit - Expenses
Gross profit margin
(gross profit / revenue) x 100
Net profit margin formula
(Net profit / revenue) x100
Average rate of return (ARR%) formula
(Average annual profit / cost of investment) x100
Net cash flow formula
Total cash inflow - total cash outflow
Margin of safety formula
Actual sales - break even point
What is cash?
all money that comes into a business
What is profit?
the money the business retains
What are examples of internal sources of finance?
- personal or business savings
- retained profits
- selling fixed assets
What are examples of external sources of finance?
- bank loans
- overdraft
- new partners
- owners’ capital
- trade credit
- government grants
- crowd funding
- retained profits