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Related Flashcards
Related Topics
Cards In This Set
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Income statement
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A document showing the sales, costs and profit of a business in a period.
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Balance sheet
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A snapshot at a point of time that shows the assets of a business and where the funds to purchase them came from.
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Cash flow
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Total cash receipts minus total cash payments, in any period.
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Breakeven point
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Fixed costs divided by contribution margin, expressed in $/£ of turnover.
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Gross profit
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Sales minus cost of sales
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Net profit
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Operating profit (gross profit minus operating costs) minus interest.
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Operating costs
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The costs of running the business and selling its products/services, such as selling, marketing and administrative costs. Not part of the cost of sales.
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Operating profit
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Gross profit minus operating costs.
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Contribution per unit
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Sales price minus variable cost.
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Margin of safety
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Sales (turnover) minus breakeven point (expressed in $/£ turnover), all divided by sales (turnover), expressed as a decimal fraction, but usually converted to a percentage.
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Death Valley curve
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The typical valley-shaped curve of the cash flow of a business start-up.
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Current assets
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Cash or assets that can be converted within one year into cash. Normally cash, debtors (receivables) and stock (inventory).
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Current liabilities
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Liabilities that need to be paid within one year. Normally overdraft, creditors (payables) and any loans or liabilities (such as hire purchase) due for repayment within the year.
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Shareholders’ funds
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The total money or equity invested in the business by all shareholders (including venture capital) plus accumulated or retained profits.
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Return to shareholders
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Net profit divided by shareholders’ funds, expressed as a decimal fraction, but usually converted to a percentage.
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