Anything a business has to pay for to trade (Raw materials, Wages, Overheads)
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Profit
Money left over after costs
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Loss
When costs are higher than revenue
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Formula for proft/loss
Revenue-Costs
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Formula for Revenue
Selling price X Units sold
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Difference Between cash and profit
Cash- money you have (may be a loan) Profit- Money you make and keep
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Why is cash important?
Without cash cash a business can't but stock, pay staff or rent a property
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Why is cash flow forecast is important?
It forecasts the amount of money a business is likely to spend. This means they can check they have enough money, helps reduce outflows, helps with loans and gives the business a target
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