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