Unit 7C Glossary

BTEC Level 3 Business Studies. Unit 7: Business Decision Making

Break-even analysis - A method of determining the level of output where total costs equal total revenue.

Break-even chart - A graphical representation of total costs, total revenue and the break-even point.

Cash flow forecasts - A prediction of the inflows and outflows of a business across a period of time in the future.

Comprehensive income - Revenue plus gains from other income such as gains and losses on asset values Contribution - Price - variable cost

Discounted cash flow - The process of calculating the current value of money received in the future.

Efficiency ratios - Calculations to measure how well a business is using its resources to generate income.

Financial projections - A company's predicted revenues, expenses, and cash flows for a given time period.

Financial statements - Reports used to summarise a company's financial condition and operations. Fixed costs - Costs that do not vary with output such as rent and salaries.

Internal rates of return - The anticipated annual rate of growth from an investment.

Interpretation of ratios - Understanding the origins of ratio results and possible solutions.

Investment appraisal - Evaluating the desirability of investment projects.

Liquidity ratios - Calculations to measure how well a business can pay its short-term debts (liabilities).

Margin of safety - The difference between actual output and the break-even point.

Net present value - The current value of money received in the future

Non-current assets - Items owned by the business that are not easily turned into cash and therefore will not be converted into cash within an accounting year.

Price - The amount of money a customer pays for a product

Profitability ratios - Calculation to measure an organisation's ability to make a profit in comparison to a range of factors.

Projected sales - Estimations of future amounts of money to be received from selling goods and services.

Ratio analysis - Calculations used to assess a company's financial health.

Revenue - The money received from selling goods and services. (P X Q)

Sales forecasts - Estimating future revenue by anticipating how much product or service a sales unit will sell.

Total costs - Fixed costs + variable costs

Variable costs - Costs that change when output changes for example raw materials and packaging costs.

Back to Unit 7 Homepage

Previous
Previous

C4 Investment Appraisal