Cash is the most liquid runny( liquid, runny ) (asset that is easily changed into cash) of all business assets. Cash is the notes & coins credit & debit cards( notes & coins, credit & debit cards ) a business keeps on the premises & any money it has in the bank. Without cash a business can’t trade. Businesses also need cash to pay for overheads big things( overheads, big things ). Businesses will often get bills for the services they have already used; if they aren’t paid the services will be cut. Finally, if a business can’t pay its employees; they will walk out. loan the business money( walk out., loan the business money )
Cashflow is a prediction of all expected receipts & expenses of a business over a future time period, which shows the expected cash balance at the end of each month.
Why are Cash Flow Forecasts Important?
Cash flow forecasts are useful for : identifying cash shortages, supporting applications for funding, help planning the business and monitoring cash flow
A cash flow forecast provides the business with a 100% accurate picture of business spend and future profits
If a business is insolvent it is .....?
doing really well financially
unable to meet its debts
looking to branch out into a different business area
Businesses have to pay for the resources they use. These expenses might include wages, raw materials, components, energy and machinery. They are called costs. However, there are different types of business costs. Some costs stay the same when a business produces more output, but others go up when more is produced. Select the 4 FIXED COSTS (sometimes known as OVERHEADS)
rent
packaging
advertising
raw materials
research and development costs
fuel
insurance payments
labour (staff)
In business, it is crucial to know how much output input( output, input ) needs to be sold to cover costs. If costs are not covered by revenue, output( revenue,, output ) the business will make a loss. If revenue is greater than costs, the business will make a profit. If costs are exactly the same as revenue, the business will break even. close( break even., close )
Break-even point is where total cost and total revenue meet
Break-even charts are graphs drawings( graphs, drawings ) which show how costs and revenues of a business change with sales. They show the level of sales the business must make in order to break-even. do well( break-even., do well )
The margin of safety is the amount sales can fall before the break-even point is reached and the business makes no profit. This calculation also tells a business how many sales they have made over their break-even point (BEP). The larger the margin of safety, the lower the risk for a business.
If a business has a break even point of of 100 products and it sells 150 of those products then the margin of safety is ?
100 products
50 products
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