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.