Total costs
Total fixed costs + total variable costs
Variable costs
Cost of one unit × quantity sold
Revenue
Price × quantity
Break even point in units
Fixed costs / ( sales price - variable cost )
Margin of safety
Actual or budget sales - break even sales
Interest ( on loans ) in %
Total repayment - borrowed amount / borrowed amount ( all × 100)
Net cash flow
Cash inflow ( receipts) - cash outflows in a given period ( payments )
Opening balance
Closing balance of the previous period
Closing balance
Opening balance + net cash flow
Profit
Total revenue - total costs
Gross profit
Sales revenue - cost of sales
Gross profit margin
Gross profit / sales revenue ( all × 100 )
Net profit
Gross profit - other operating expenses and interests
Net profit margin
Net profit/ sales revenue ( all × 100 )
Average rate of return
Average annual profit ( total profit / No. of years )/ cost of investment ( all × 100 )
Percentage growth
Increase in size / original size ( all × 100 )
Fixed costs
Costs that don't change as output changes
Example of a fixed costs
Rent / insurance
What is a variable cost
Costs that change as output changes
Example of a variable cost
Ingredients / fuel for delivery van / packaging
Cost of sales ( direct costs )
Cost directly associated with production
Example of a direct cost
Raw materials
Operating expenses ( indirect costs )
Costs not directly associated with production
Example of an indirect cost
Administration
Uses of financial data
Analyse the performance of a company
Make predictions about the future direction of the companies stock price
Limitations of financial data
Doesn’t give solutions
Snapshot of time / doesn't show progression