Flashcards in 2.2 financial planning Deck (55)

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1

## what is sales volume?

### - the amount of output sold in a particular time period

2

## what is the formula for sales volume?

###
sales revenue

--------------------

selling price

3

## what is sales revenue?

### - the value of output sold in a particular time period

4

## what is the formula for sales revenue?

### price X sales volume

5

## what is a fixed cost?

### - costs which don't change with the level of output

6

## what are variable costs?

### - costs which change directly with the changes to output

7

## what is a semi-variable costs?

###
- a costs that consist of both fixed and variable element

- e.g labour

8

## what's the formula for variable costs?

### - variable cost Pu X units produced

9

## what's the formula for total costs?

### variable costs + fixed costs

10

## what's the formula for average costs?

###
total costs

-------------

output

11

## what's the formula for profit?

### revenue - total costs

12

## what is capital expenditure?

### - money spent on long term assets such as buying a factory

13

## what is revenue expenditure/

### - money spent on buying day to day items such as raw materials

14

## what is a debtor?

### - owes the business money

15

## what is a creditor?

### - owes 3rd parties money

16

## what does insolvent mean?

### - a business doesn't have enough cash to pay costs

17

## what's the formula for net cash flow?

### inflows - outflows

18

## what's the formula for closing balance?

### opening balance + net cash flow

19

## what is liquidity?

### - ease with which assets can be turned into cash

20

## what is capital?

### - the amount of money which has gone into the business

21

## what is sales forecasting?

### - projection of future sales revenue, often based on previous sales data

22

## what is time series data?

### - a method that allows a business to predict future levels from past figures

23

## what is extrapolation?

### - forecasting future trends based on past data

24

## what are benefits of sales forecasting?

###
- helps inform cash flow forecasting and accurate budgeting

- enables them to predict appropriate staffing levels

- helps understand demand

25

## what is the Delphi method?

### - involves getting a group of market experts to provide an opinion on the forecasting task

26

## what does breakeven mean?

### - where a business makes neither a profit or a loss

27

## what's the formula for breakeven?

### - total costs = total revenue

28

## what are 3 ways to find breakeven?

###
- calculate using a table of costs and output

- interpreting charts

- using a formula

29

## what is margin of safety?

### - the difference between the actual units of output and the breakeven output

30