2.2 financial planning Flashcards Preview

business a level > 2.2 financial planning > Flashcards

Flashcards in 2.2 financial planning Deck (55)
Loading flashcards...
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

what's the formula for margin of safety?

current output - breakeven output