Edexcel Business A Level Revision

Profit - surplus of revenue when costs are covered Gross profit -  Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Operating profit -  Records how much profit has been made in total from the trading activities of the business before any account is taken of how the business is financed. Statement of comprehensive income - A formal financial document that summarises a business' trading activities and expenses to show whether it has made a profit or loss. Profit margin - tells the business just what percentage of its turnover is actually profit. It is the ratio of profit to sales revenue as a percentage PROFIT = TOTAL REVENUE - TOTAL COSTS There are 3 types of profit; Gro...

Cash flow forecast - is a statement of the expected cash inflow coming from the sales revenue and expected cash outflow needed to cover production costs. The difference between the inflow and the outflow is the net cash flow , a crucial indicator of the ability of a business to cover its day-to-day running costs. Cash flow is important to a business as it needs it to ensure a positive cash balance in order to meet day to day expenses. It roughly estimates cash flow for up to about two years into the future. The forecast will help potential lenders (including banks) to see what the likely financial needs of the business will amount to.  CALCULATING CASH FLOW Opening Balance = what is in the bank on the first day of the month Total cash inflow = all cash entering the business in that month Total cash outflow = all cash leaving the business in that month Net cash flow = Total cash inflow - Total cash outflow Closing balance = Opening balance + Net cash flow FIGUR...