Financial planning Flashcards
What is consumer income?
the amount of income remaining after taxes and expenses have been deducted from wages
What are consumer trends
the habits and behaviors of consumers that determines the goods and services they buy
What are economic growth?
the rise in output of an economy as measured by growth in Gross Domestic Product (GPD) usually as a percentage
What is economic variables?
Measures within the economy which have effect on businesses and consumers, Examples include unemployment inflation and exchanges rates
What is Extrapolation?
forecasting future trends based on past data
What is forecasting
a business process assessing the probable outcome using assumptions about the future
What is sale forecasting
projection of future sales revenue, often based on previous sales data
What is the purpose of sales forecasts
How much stock to purchase?
How many staff to employ?
How much finance is required?
What marketing strategy?
How can trends be used as a method of analysis
raw data shows patterns of sales figures, this allows trends to be identified
What are the benefits of sales forecasting?
informs cash-flow forecasts
plan for deliveries of supplies
ensures correct staffing levels
ensure that business can identify any capacity issues
What factors affect sales forecasting?
consumer trends
economic variables
action of competitors
How do consumer trends affect sales forecasting?
business need to satisfy their customers’ needs and desires the ones who are the most successful at doing this are the ones who can anticipate changes in consumer trends, either by identifying them or influencing them
How does unemployment affect sales forecasting?
unemployment measures the number of people who are out of work but actively seeking employment
if unemployment is low, this means that businesses feel confident about the strength of the economy as consumers feel secure in their jobs, with less need to save
However, if unemployment is high, that these out of work will be living off reduced incomes, meaning they have less disposable income, this will lead to a reduction in spending on all but non-essential items, this would lead to reduced sales forecasts
What is average cost or unit cost
the cost of producing one unit, calculated by dividing the total cost by the output
What are fixed costs?
a cost that does not change as a result of a change in output in the short run
