Topic 6 5.0 / 5 based on 1 rating ? Business Studies & EconomicsUnit 1 Topic 6ASAQA Created by: LauraCreated on: 26-11-13 14:51 A Forecast Predicts the timings of cash coming into and going out of the business 1 of 20 Benefits Of Producing CFF Identify timings&amounts of cash shortages, can arrange financial cover, re-schedule payments & receipts, obtain finance 2 of 20 Weaknesses of CFF Can be hard to predict cash flow, depends on knowlege already, harder to predict further into future 3 of 20 Profit When revenue is greater than cost 4 of 20 Revenue Money into the business from selling goods/services 5 of 20 Costs The money spent by the business in generating goods and services 6 of 20 Loss When costs are greater than revenue 7 of 20 Profit/Loss Equation Revenue - Costs 8 of 20 Revenue Equation Quantity sold x Price sold at 9 of 20 Costs Equation Price of item x Quantity sold 10 of 20 Competitive Pricing Charging a price similar to your competitors 11 of 20 Skimming/Creaming Pricing Selling at a high price for a short period of time 12 of 20 Penetration Pricing When the firm charges a low price for a short period of time 13 of 20 Premium Pricing The strategy of charging a high price continuously 14 of 20 Fixed Costs Money that needs to be paid but stays the same price regardless of changes to output or sales 15 of 20 Variable Costs Money that needs to be paid but can change depending on demand 16 of 20 Total Costs Overall money that needs to be paid (fixed costs + variable costs) 17 of 20 Sales Revenue Money made from selling goods/services 18 of 20 Break Even When money coming in is the same as the money going out of a business, neither a loss or profit is made 19 of 20 Margin Of Safety Ideally, you want a high margin of safety: Actual Production Level – Break even Level 20 of 20
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