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Break-even analysis
examination of the income statement that identifies the break-even point for a busniess.
Commission
amount paid based on the volume of products or service that a salesperson sells.
Disposal value
amount for which equipment can be sold at the end of its business life, also called salvage value.
Salary
fixed amount of money that employee is paid on a regular basis.
Cash flow statement
financial document that records inflows and outflows of cash when the actually occur.
Cost Structure
a business design that ensure the business will be profitable with each sale after expense.
Break-even point
Point at which the total at the bottom of the income statement is zero because the business has sold exactly enough unit for sales to cover expense.
Volume Discount
discount for buying greater quantities.
Cyclical
refers to cash flow that varies according to the time of year
Variable expense
expense that changes based on the amount of product or service a business sells.
depreciation expense
amount of depreciation calculated per year.
Contribution Margin
amount per unit that a product contributes to where the companies probability before the fixed expense are subtracted.
Break-even units
number of units of sales a business needs to sell to arrive at the break even point.
Labor
the amount of money being paid in return for someones time, usually in the form of full time or part time employees.
Salvage value
amount for which equipment can be sold at the end of its business life, also called disposal value.
Cost of services sold (COSS)
variable expense that is associated with each unit of sale including the cost of material and labor used to provide the service.
Depreciation
accounting method of spreading the total cost of the equipment a business buys over the amount of years it would be used.
Cost of goods sold (COGS)
variable expense that is associated with each unit of sale, including the cost of material and labor used to make the product.
Burn rate
rate at which a company spends cash to cover overhead costs without generating a positive cash flow.
Indirect Competitor
business that sells a different product or service from yours but fulfils the same customer need or want.
Straight line method of depreciation
method used to calculate the depreciation of equipment based on how long the equipment will last.
Economy of scale
cost reduction made possible by spreading cost over a larger volume.
Fixed expense
expense that isn't affected by the number of items a business produces.
Quota
limit on the quantity of a product the can be imported into a country.
Cash Flow
money received minus what is spent over a specified period of time.