Topic 6

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  • Created by: Laura
  • Created on: 26-11-13 14:51
A Forecast
Predicts the timings of cash coming into and going out of the business
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Benefits Of Producing CFF
Identify timings&amounts of cash shortages, can arrange financial cover, re-schedule payments & receipts, obtain finance
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Weaknesses of CFF
Can be hard to predict cash flow, depends on knowlege already, harder to predict further into future
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Profit
When revenue is greater than cost
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Revenue
Money into the business from selling goods/services
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Costs
The money spent by the business in generating goods and services
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Loss
When costs are greater than revenue
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Profit/Loss Equation
Revenue - Costs
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Revenue Equation
Quantity sold x Price sold at
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Costs Equation
Price of item x Quantity sold
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Competitive Pricing
Charging a price similar to your competitors
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Skimming/Creaming Pricing
Selling at a high price for a short period of time
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Penetration Pricing
When the firm charges a low price for a short period of time
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Premium Pricing
The strategy of charging a high price continuously
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Fixed Costs
Money that needs to be paid but stays the same price regardless of changes to output or sales
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Variable Costs
Money that needs to be paid but can change depending on demand
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Total Costs
Overall money that needs to be paid (fixed costs + variable costs)
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Sales Revenue
Money made from selling goods/services
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Break Even
When money coming in is the same as the money going out of a business, neither a loss or profit is made
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Margin Of Safety
Ideally, you want a high margin of safety: Actual Production Level – Break even Level
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Other cards in this set

Card 2

Front

Identify timings&amounts of cash shortages, can arrange financial cover, re-schedule payments & receipts, obtain finance

Back

Benefits Of Producing CFF

Card 3

Front

Can be hard to predict cash flow, depends on knowlege already, harder to predict further into future

Back

Preview of the back of card 3

Card 4

Front

When revenue is greater than cost

Back

Preview of the back of card 4

Card 5

Front

Money into the business from selling goods/services

Back

Preview of the back of card 5
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