IGCSE Business - Cash, Costs, Break Even, Statements etc

Cash is the most [blank_start]liquid[blank_end] (asset that is easily changed into cash) of all business assets. Cash is the [blank_start]notes & coins[blank_end] 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 [blank_start]overheads[blank_end]. 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 [blank_start]walk out.[blank_end]

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?

If a business is insolvent it is .....?

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)

In business, it is crucial to know how much [blank_start]output[blank_end] needs to be sold to cover costs. If costs are not covered by [blank_start]revenue,[blank_end] 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 [blank_start]break even.[blank_end]

Break-even point is where total cost and total revenue meet

Break-even charts are [blank_start]graphs[blank_end] 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 [blank_start]break-even.[blank_end]

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 ?