- Created by: Amy_Liz123
- Created on: 14-01-19 20:21
a business sells it's debt to a debt facotry, they give 80-90% upfront, the rest is given once it's been collected from the debtors minus a small fee.
- improves cashflow
- reduces hassle of chasing payment
- Not good for overall profit
- reduces revenue received from sales
Margin Of Safety
MARGIN OF SAFETY
Actual level of output - breakeven output
A larger margin of safety is better since the business' sales have to decrease further in order to make a loss.
- selling price - increases, break even point decreases making margin of safety larger
- variable cost- increases, break even point increases making margin of safety smaller
- Fixed cost- increases, break even point increases making margin of safety smaller