Words 2.1 Flashcards
Cash flow forecast
Predictive business management tool which estimates monthly cash inflows and outflows to be able to manage net cash flow
Opening balance
Cash balance at the start of each month which is the closing balance from the previous month
Net cash flow balance
Difference between cash flowing in and out of the business in a given month
Closing balance
Amount left in a business bank account each month
Adverse variance
Difference between budgeting and actual figure that is damaging to a firms profit
Favourable variance
Difference between budgeting and actual figures that boosts a firms profit eg revenue costs up or down
Income budget
Setting minimum figure for revenue to be generated by a product a department or manager
Zero budgeting
Setting all future budgets at £0 to force managers to have to justify the spending levels they say they need in the future
Margin of safety
The amount by which current output exceeds the level of output necessary
Contribution
Selling price less variable costs per unit
Break even
Predictive calculation used to calculate the amount of business must sell to cover its costs ie where total revenue = total costs which is the point where a business makes neither profit nor a loss
Break even formula
Selling price per item - variable costs which per item = contribution
Fixed costs / contribution = breakeven quantity
Total contribution formula
Contribution = breakeven quantity
Total revenue at breakeven formula
Selling price per item x breakeven quantity
Sales forecast
A method of predicting the future sales using statistical methods
Time series data
A method that allows a business to predict future levels on past figures
Extrapolation
Forecasting future trends based on past data
Real incomes
Changes in household incomes after allowing for changes in prices eg %change in household income-inflation = real income
Contingency plans
Plans held in reserve in case things go wrong eg sales being predicted are 10% lower based on worst case
Sales volume
Number of units sold in a given time period
Happy
What we will be when you get a good grade on this course
