Unit 1: Finance (1)
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- Created on: 03-05-15 10:19
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- Unit 1: Finance
- Business Costs
- Revenue
- Income earned by a business.
- = Number Sold X Selling Price
- To increase: Increase amount sold and selling price.
- Costs
- Are the expenses paid out to run the business.
- Direct Costs - are expenses to making a specific product.
- Indirect Costs - are general overheads of the business.
- Total Costs = Direct Costs + Indirect Costs
- Fixed Costs - Do not vary with the output of a business.
- Variable Costs - are costs that will increase as the firm expands output.
- Total Cost = Variable Cost + Fixed Cost
- Average Costs = Total Cost / Output
- Profit
- What is left after costs have been deducted.
- Loss - When revenue is less than costs.
- Profit (or loss) = Revenue - Costs
- Revenue
- Cash Flow
- Flow of money in and out of a business.
- Poor Cash Flow
- Poor Sales
- Overtrading
- Poor Business Decisions
- Improve Cash Flow
- Sell Stock
- Cut Payments
- Reschedule Payments
- Cash Flow Forecast
- Prediction of a business future cash inflow and outflow.
- Allows owners to check they will have enough cash.
- Forecasted numbers can be used as targets.
- Different parts
- Receipts/income
- Payments/expenditure
- Net Cash Flow
- Closing Balance
- Business Costs
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