theme 2 definitions Flashcards
creditor
someone who a business owes money to
debator
someone who owes money to a business
fixed cost
cost that stays the same no matter how much or little a firm produces 1§
variable cost
a cost that varies depending on how much a business outputs
revenue / turnover
the amount of money a firm has earned in a given time period usually from sales
profit
the difference between the total revenue and total costs
loss
when the costs are greater than the revenue
margin of safety
difference between break-even output and actual output - the amount the sales can fall before the break even point
gross profit margin
the % of sales revenue left once the costs have been paid
profitability
the amount of profit that has been generated by a business, relative to revenue or investment
cashflow
money that moves in and out of a business over a set period of time
dividends
A portion of a company’s profits that is distributed to its shareholders as a reward for their investment.
break even
The level of sales at which total revenues equal total costs, resulting in no profit or loss.
margin of safety
differenece between actual sales and the break even sales - shows how much sales can drop before the business has a loss
net profit margin
shows % of revenue left as profit after all costs are paid
