LO4- Be Able To Use Finanical Information To Check The Finanical Health Of Business Flashcards
Fixed cost definition
a cost that does not change with output
Variable cost definition
a cost that changes with output
Semi variable cost definition
costs composed of a mixture of both fixed and variable components
Revenue definition
total money made throughs sales of goods and services
Cash flow definition
the flow and the movement of cash (what comes in and out of the business money wise)
Profits definition
when revenue is higher than total cost. A financial gain.
Break- even definition
when revenue is equal to total cost
Margin of safety definition
the amount sales that are above the break even point. The difference between break even and the actual value.
Depreciation definition
the actual decrease in value of an asset over time
Opportunity definition
the loss of other alternative when one alternative is chosen
Insolvent definition
When a business is unable to pay its debts
Revenue formula
Selling price x quantity sold
Profit formula
Revenue - total costs
Break even output formula
Fixed cost/ (selling price - variable cost)
Net cash flow formula
Cash inflow- cash outflow
