Progress Check 2 - Managing Money, Business Cycle, Sources of Help & Advice Flashcards
What are incomings?
Money earned/received by a business
What are outgoings?
Money paid out of or spent by a business
Uses of incoming/outgoing sheet?
Identify excess money for supporting new projects
Spotting and solving cash flow problems
Solution to falling sales?
Change/diversify product portfolio
Reduce price/have a sale (special promotion)
Increase adverts/sell in new area
Solution to increasing costs/expenses
- Find cheaper supplier
- Lower the wages
- Less Overtime
- Lower the rent/utilities
- Avoid single large purchases
What is a cash flow statement?
Monitoring documents that records the actual money going into and out of a business on a monthly basis
What is a cash flow forecast?
Planning document that looks at potential money that may come into a business
What is a monitoring document?
Allows business to check if plans are effective
What is a break-even chart?
A tool to identify the number of items necessary to be sold to cover all costs and stop making a loss.
Pros and Cons of Increasing selling price
Pros - Fewer units to sell
Cons - Loss of customer loyalty and customers moving to competition
Risk of lowering your variable costs
- Lower quality
- Lower Reputation
- Lower sales
- More complaints
Risk of lowering fixed costs
Lose employees
Difficult to maintain image
What is an income statement?
Shows profit and loss of an organisation over a period of time
What are variable costs?
Any costs directly linked to the item sold (e.g. raw materials)
What are fixed costs?
Costs paid regardless of sales e.g rent, wages, insurance etc.
