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437
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11 Feb 2023
•
How Money Moves: Cost Analysis, Break Even, and Cash Flow!
H
Hilary Cheng
@hilarycheng_fiun
Business Profit & Break Even Analysis
This section delves into the concepts of profit and break even point calculation, which are vital for assessing a business's financial performance. Profit is the surplus money a business makes after accounting for all costs. It's calculated by subtracting total costs from total revenue.
Break-even analysis is a crucial tool for businesses to determine the point at which they neither make a profit nor a loss. The break-even point is reached when revenue equals total costs.
Vocabulary: Average unit cost is calculated by dividing total cost by output, helping businesses determine the minimum price they need to charge to make a profit.
Definition: Break-even point is the level of sales where a business's revenue equals its total costs, resulting in neither profit nor loss.
Example: If a business sells more than the break-even level of output, it will make a profit; if it sells less, it will incur a loss.
Highlight: Break-even analysis can be visually represented using a break-even chart, which shows total costs, revenue, and profit on the y-axis and output on the x-axis.
Cash & Cash Flow
This section focuses on cash and cash flow management strategies, which are crucial for maintaining a business's financial health. Cash refers to the money a business can spend immediately, excluding money owed or receivable. Cash flow represents the amount and timing of money moving in and out of a business.
Cash flow forecasts are essential tools for predicting future financial situations. They help businesses estimate potential cash inflows and outflows based on past data and market research.
Definition: Net cash flow is the difference between cash inflows and cash outflows.
Vocabulary: Opening balance is the amount of cash a business starts trading with, while closing balance is the amount it finishes trading with.
Highlight: Persistent negative cash flows can lead to serious consequences, including inability to pay suppliers and employees, potentially damaging stakeholder relationships.
Example: A business with a high opening cash balance may be able to withstand temporary negative net cash flows without immediate liquidity problems.
Sources of Business Finance
This final section explores various sources of business finance, both short-term and long-term, that companies can use to fund their operations and growth. Understanding these options is crucial for effective cash flow management strategies and overall financial planning.
Short-term financing options include bank overdrafts, which allow businesses to spend more than their current account balance, and trade credit, where firms pay suppliers at a later date. Long-term financing methods include share capital, where a firm sells partial ownership of the business, and loans or mortgages from banks.
Vocabulary: Crowdfunding is a modern financing method where a business raises small amounts of money from a large number of investors, typically through online platforms.
Highlight: Personal savings from business owners can be an important source of finance, especially for small or new businesses.
Example: Share capital involves selling a percentage of company ownership in exchange for investment, which can provide substantial funding but dilutes ownership.
Definition: Bank overdraft is a short-term financing option where a bank allows a business to spend more money than it has in its current account, providing temporary cash flow relief.
Business Revenues and Costs
This section explores the fundamental concepts of business revenues and costs, which are essential for business revenue cost analysis. Revenue represents the income earned by a business from selling goods and services, calculated by multiplying the number of sales by the sales price. On the other hand, costs encompass all expenses a business incurs, from employee wages to utility bills.
The total cost is the sum of fixed costs and variable costs. Fixed costs remain constant regardless of output changes, while variable costs fluctuate directly with production levels. Understanding these cost types is crucial for effective financial management.
Definition: Margin of Safety is the difference between actual output and the break-even point, indicating how much output can decrease before the business reaches its break-even level.
Example: Fixed costs include office rent and insurance, while variable costs include raw materials and transport costs.
Highlight: The equation for calculating revenue is: Number of sales × Sales price.
Can't find what you're looking for? Explore other subjects.
Students love us — and so will you.
4.9/5
App Store
4.8/5
Google Play
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
How Money Moves: Cost Analysis, Break Even, and Cash Flow!
H
Hilary Cheng
@hilarycheng_fiun
Business revenue and cost analysis is crucial for understanding a company's financial health. This summary covers key concepts including break even point calculation, profit analysis, and cash flow management strategies.
- Revenue is income from sales, while costs include... Show more
Business Profit & Break Even Analysis
This section delves into the concepts of profit and break even point calculation, which are vital for assessing a business's financial performance. Profit is the surplus money a business makes after accounting for all costs. It's calculated by subtracting total costs from total revenue.
Break-even analysis is a crucial tool for businesses to determine the point at which they neither make a profit nor a loss. The break-even point is reached when revenue equals total costs.
Vocabulary: Average unit cost is calculated by dividing total cost by output, helping businesses determine the minimum price they need to charge to make a profit.
Definition: Break-even point is the level of sales where a business's revenue equals its total costs, resulting in neither profit nor loss.
Example: If a business sells more than the break-even level of output, it will make a profit; if it sells less, it will incur a loss.
Highlight: Break-even analysis can be visually represented using a break-even chart, which shows total costs, revenue, and profit on the y-axis and output on the x-axis.
Sign up to see the contentIt's free!
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Cash & Cash Flow
This section focuses on cash and cash flow management strategies, which are crucial for maintaining a business's financial health. Cash refers to the money a business can spend immediately, excluding money owed or receivable. Cash flow represents the amount and timing of money moving in and out of a business.
Cash flow forecasts are essential tools for predicting future financial situations. They help businesses estimate potential cash inflows and outflows based on past data and market research.
Definition: Net cash flow is the difference between cash inflows and cash outflows.
Vocabulary: Opening balance is the amount of cash a business starts trading with, while closing balance is the amount it finishes trading with.
Highlight: Persistent negative cash flows can lead to serious consequences, including inability to pay suppliers and employees, potentially damaging stakeholder relationships.
Example: A business with a high opening cash balance may be able to withstand temporary negative net cash flows without immediate liquidity problems.
Sign up to see the contentIt's free!
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Sources of Business Finance
This final section explores various sources of business finance, both short-term and long-term, that companies can use to fund their operations and growth. Understanding these options is crucial for effective cash flow management strategies and overall financial planning.
Short-term financing options include bank overdrafts, which allow businesses to spend more than their current account balance, and trade credit, where firms pay suppliers at a later date. Long-term financing methods include share capital, where a firm sells partial ownership of the business, and loans or mortgages from banks.
Vocabulary: Crowdfunding is a modern financing method where a business raises small amounts of money from a large number of investors, typically through online platforms.
Highlight: Personal savings from business owners can be an important source of finance, especially for small or new businesses.
Example: Share capital involves selling a percentage of company ownership in exchange for investment, which can provide substantial funding but dilutes ownership.
Definition: Bank overdraft is a short-term financing option where a bank allows a business to spend more money than it has in its current account, providing temporary cash flow relief.
Sign up to see the contentIt's free!
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Business Revenues and Costs
This section explores the fundamental concepts of business revenues and costs, which are essential for business revenue cost analysis. Revenue represents the income earned by a business from selling goods and services, calculated by multiplying the number of sales by the sales price. On the other hand, costs encompass all expenses a business incurs, from employee wages to utility bills.
The total cost is the sum of fixed costs and variable costs. Fixed costs remain constant regardless of output changes, while variable costs fluctuate directly with production levels. Understanding these cost types is crucial for effective financial management.
Definition: Margin of Safety is the difference between actual output and the break-even point, indicating how much output can decrease before the business reaches its break-even level.
Example: Fixed costs include office rent and insurance, while variable costs include raw materials and transport costs.
Highlight: The equation for calculating revenue is: Number of sales × Sales price.
Can't find what you're looking for? Explore other subjects.
Students love us — and so will you.
4.9/5
App Store
4.8/5
Google Play
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user