2.2 Financial Planning

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Sales Forecasting
A prediction of future sales within a given time period.
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Why do companies create sales forecasts?
Profit projections; help create budgets; staff performance targets; Stock listings etc
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Factors that influence sales forecasts
Seasonal trends; Consumer trends; Competition; Economic trends
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Contribution
Sales Revenue- Variable Costs
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Unit Contribution
Selling Price- Unit Variable Cost
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Axis of Break Even Chart
Costs/Revenues and Output
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Factors Measured on a Break Even Chart
Total Revenue, Total Costs, Fixed Costs and Breakeven Point.
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Margin of Safety
Actual Output- Breakeven Output
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Margin of Safety Profit Formula
Margin of Safety x Unit Contribution= Profit
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Breakeven Profit Target Formula
Fixed Costs + Target Profit/ Unit Contribution
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Breakeven
The level of sales/output where you are neither making a profit or loss.
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Breakeven Output Formula
Fixed Costs/ Unit Contribution
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Other cards in this set

Card 2

Front

Profit projections; help create budgets; staff performance targets; Stock listings etc

Back

Why do companies create sales forecasts?

Card 3

Front

Seasonal trends; Consumer trends; Competition; Economic trends

Back

Preview of the back of card 3

Card 4

Front

Sales Revenue- Variable Costs

Back

Preview of the back of card 4

Card 5

Front

Selling Price- Unit Variable Cost

Back

Preview of the back of card 5
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