Equations

• Gross profit


  Sales revenue - cost of goods sold
• to calculate revenue


  price X quantity
• operating profit


  gross profit - expenses
• cash inflows - cash outflows= ?


  surplus
• profit margin = gross profit / sales revenue x100%
• break even point (BEP) is the level at which total costs equal total revenues.
• total fixed costs are all the costs that do not change when output changes, such as rent or salaries.
• variable costs are those that vary with output, such as raw materials or labour.
• variable cost per unit is the amount it costs to produce one more item.
• the break-even chart shows how many units must be produced to cover both variable and fixed costs.
• Net cash flow


  Total cash inflow - total cash outflow
• Closing balance=


  Opening balance + net cash flow