Total Revenue* = Price x Quantity Sold
TR = P x QS
*Total Revenue (aka. turnover) is the total amount of money earned by a firm from selling its goods/services.
Total Cost=Variable Costs* + Fixed Costs* TC = VC + FC
*Variable Costs are costs such as raw materials and labour, which change depending on the outflow.
*Fixed Costs are costs such as rent and insurance which will never change, regardless of the outflow.
Total Revenue = Total Costs
BE*occurs when TR = TC
*The Break even point is where the firm has neither made a profit or a loss.
MARGIN OF SAFETY:
Margin of Safety is the difference between current output and break even output.
Margin of Safety = Current Output - Break Even Output
MoS = CO - BEO
NET CASH FLOW:
Net Cash Flow=Total Inflow - Total Outflow
NCF = TI - TO
(Take the Total of what comes in and minus the Total of what goes out)
Closing Balance=Net Cash Flow + Opening Balance
CB = NCF + OB