Terminology Flashcards
Sales Turnover - Definiton
Sales turnover is the total amount of revenue generated by a business during the calculation period.
Why is sales turnover useful?
The concept is useful for tracking sales levels on a trend line through multiple measurement periods, in order to spot meaningful changes in activity levels.
What is the calculation period for sales turnover?
The calculation period is usually one year.
Cost Of Goods Sold - Definition
Cost of goods sold (COGS) are the direct costs attributable to the production of the goods sold by a company.This amount includes the cost of the materials used in creating the good along with the direct labour costs used to produce the good.
How do you work out cost of goods sold?
Subtract the value of your inventory at year-end. This will provide you with your cost of sales. Expressed as a formula: beginning inventory + inventory purchases and expenses - ending inventory = cost of sales, also known as cost of goods sold.
Opening Stock - Definition
The amount of goods that are in stock at the beginning of a particular period of time.
Closing Stock - Definition
Closing stock is the amount of inventory that a business still has on hand at the end of a reporting period. The amount of closing stock can be ascertained with a physical count of the inventory.
Examples of closing stock
This includes raw materials, work-in-process, and finished goods inventory.
Gross Profit - Definition
Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.
Gross Profit Formula
Gross profit will appear on a company’s income statement or can be calculated with this formula: Gross profit = revenue - cost of goods sold.
Net Profit - Definition
The actual profit after working expenses not included in the calculation of gross profit have been paid.
Total costs Formula
Variable Costs + Fixed Costs
Sales Revenue Formula
Price x quantity or number sold
What is the break even point?
Break even point is the point when a business hasn’t made a profit or a loss.
Give an example of an inflow on a cash-flow forecast
Sales
