GCSE: Accounting & Finance

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How to calculate 'break even'

  1. 1 There are three ways this can be done. All will give the same answer which is the number of products the business must make or sell to ‘break even’. This means they receive as much revenue as their costs.
  2. 2 A break even table will list the fixed cost, variable cost, total cost (fixed plus variable cost), revenue and profit or loss for each level of output. As profit or loss is the revenue minus the total cost this can be calculated relatively easily, especially if you use a spreadsheet program..
  3. 3 A break even graph plots the total cost and revenue for all the levels of output. Where the total cost and revenue intersect is the break even point. This can be easily produced from the table using the chart wizard.
  4. 4 The break even formula gives you the break even output. The formula is fixed cost divided by the price of one unit minus the variable cost.
  5. 5 The margin of safety is the number of items being produced, over and above the break even point.

What is cash flow?

  1. 1 Cash flow looks at the cash flowing through a business. It is not the same as the profit being made as businesses may be receiving goods on credit or giving credit to customers. This means that although a business may be profitable, it may still run out of cash. This could cause the business to go bankrupt.
  2. 2 A cash flow forecast predicts the flow of cash going through the business. A business may use it to see if there are any months when it will run out of cash.
  3. 3 Knowing that it may run out of cash in any month means that a business can plan for this by possibly arranging a bank overdraft.
  4. 4 A bank overdraft is an agreement arranged with a bank whereby if the business runs out of cash, the bank will lend it money to keep it trading. This overdraft will normally be at a high rate of interest but is better for a business than running out of cash.
  5. 5 A business may also cover a period of negative cash flow by deferring payment to suppliers or getting payment early from customers.

What could be a source of finance?

  1. 1 Many students go wrong when discussing sources of finance by not relating them to the size of the business or the reason they need it. A new business starting up has different needs to an existing business looking to expand.
  2. 2 Sources of finance available to sole traders and partnerships include the owner’s funds, borrowing from friends and relatives, bank borrowing or funds from venture capitalists that specialise in lending to new businesses.
  3. 3 A problem for sole traders and partnerships is unlimited liability. This means that the owner is responsible for all the debts of the business, not just the amount they have invested.
  4. 4 Private limited companies and public limited companies have limited liability. This means that investors in the businesses can only lose the amount they have invested. This makes it much easier for them to raise finance as people are more likely to lend to them knowing the maximum amount they can lose.
  5. 5 A benefit of selling shares compared with borrowing from the bank is that the money does not need to be repaid. Share holders will expect a share of the profits. With a loan, the amount borrowed has to be repaid with interest.

249 GCSE Accounting & Finance essays

  • Marked by Teachers essays 5
  • Peer Reviewed essays 7
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  1. Marked by a teacher

    Cash flow. A cash flow forecast is a document that predicts cash requirements in the future. It helps a business save money for things it may need in the future

    4 star(s)

    ****
    A pretty thorough analysis of a cash flow forecast. There are some inaccuracies which I have pointed out.…

    • Essay length: 758 words
    • Submitted: 09/07/2011
    • Marked by teacher: (?) David Salter 21/03/2012
  2. Marked by a teacher

    Financial analysis for a new business - Delight Lollies

    4 star(s)

    ****
    A good structure and many good points are made here. There are some inaccuracies and it does all make it sound easy. More application to the case study is…

    • Essay length: 784 words
    • Submitted: 04/06/2011
    • Marked by teacher: (?) David Salter 21/03/2012
  3. Marked by a teacher

    effective cashflow management

    4 star(s)

    ****
    The writer has done some effective research and explored many of the ways of dealing with cash flow problems. Missing out on the overdraft is a fundamental flaw as…

    • Essay length: 1263 words
    • Submitted: 16/05/2009
    • Marked by teacher: (?) David Salter 05/04/2012
  4. Marked by a teacher

    Business Finance. There are a number of sources of finance, which businesses will need in order to start up a new business, make their business expand and buying materials required for their business.

    3 star(s)

    The writer is confused over the difference between a loan and an investment in the business. The disadvantages of the owners capital discussed above are actually disadvantages of getting new…

    • Essay length: 2125 words
    • Submitted: 20/09/2010
    • Marked by teacher: (?) David Salter 12/02/2012
  5. Marked by a teacher

    cash flow

    3 star(s)

    This essay confuses cash flow with profit and loss. They are different and the reasons for this difference is referred to (seasonal, credit, irregular payments). There should be more discussion…

    • Essay length: 1677 words
    • Submitted: 19/05/2009
    • Marked by teacher: (?) David Salter 12/02/2012
  6. Peer reviewed

    Stock Market Crash

    5 star(s)

    This essay engages superbly with the question, exploring the causes of a stock market crash and evaluating why significant crashes were caused. I liked how they used two historical crashes…

    • Essay length: 1225 words
    • Submitted: 16/11/2008
    • Reviewed by: (?) groat 21/02/2012
  7. Peer reviewed

    Business Costs

    5 star(s)

    The author answers the question about costs very well, as he/she sets out a section for each cost and describes each very well. The author improves their response by giving…

    • Essay length: 348 words
    • Submitted: 11/07/2002
    • Reviewed by: (?) islander15 23/02/2012
  8. Peer reviewed

    TO: The PQR Company (Current Shareholders)

    4 star(s)

    In summary, the report is relatively a high standard. The report focuses on three areas of the buisness, and explains a little regrading each one. However some sections do not…

    • Essay length: 1344 words
    • Submitted: 10/11/2005
    • Reviewed by: (?) danielbeal 05/04/2012
  9. Peer reviewed

    The collapse of energy giant Enron.

    4 star(s)

    In summary, the report is well written. The report states how Enron was a large buisness and the types of financial polices that there undertook. The student also understands the…

    • Essay length: 830 words
    • Submitted: 06/04/2004
    • Reviewed by: (?) danielbeal 05/04/2012
  10. Peer reviewed

    Management of costs.

    4 star(s)

    In summary, the report is quite good in the sections which are complete. The report states three different types of cost, and has given examples of the Net Present Value…

    • Essay length: 1342 words
    • Submitted: 18/03/2004
    • Reviewed by: (?) danielbeal 05/04/2012

Conclusion analysis

Good conclusions usually refer back to the question or title and address it directly - for example by using key words from the title.
How well do you think these conclusions address the title or question? Answering these questions should help you find out.

  1. Do they use key words from the title or question?
  2. Do they answer the question directly?
  3. Can you work out the question or title just by reading the conclusion?
  • Compare the two companies Tesco's and McDonalds

    "McDonalds first opened in 1974. More than 2.5 million people in this country trust McDonalds to give them food of a high standard, quick service and value for money. In my opinion McDonalds create a high standard of customer satisfaction. My reason for thinking is this because customer convenience and research is driving force behind new restaurant locations - which had led to new McDonalds in sites as varied as cross- channel ferries, a bowling alley and London's former county hall. Currently there are more than 1000 McDonald's restaurants throughout the UK. McDonald's business activity External Influences and the Stakeholder Model: McDonald's - Activity Image: Business has not been going as well for McDonald's in recent years because it is struggling to keep up with the demands being made to it. There are a number of Activities("

  • Assess the contribution of set and lighting to

    "In conclusion, the contribution of set and lighting in the play 'The Smallest Person' on their own was basic and failed to create an atmosphere that could affect the audience. However together, there was quite different effect as the two conventions worked together to find an equilibrium of their imbalances and achieve a good affect upon the audience. Khushwant Bhakar 12Jr"

  • Auditing is becoming an increasingly expensive part of the management of health care. Discuss the role it plays in the financial management of a hospital, and comment on the value this adds.

    "13. Conclusions The impact of US scandals have made auditing a high profile subject. The primary purpose of audit within the public sector remains to demonstrate the appropriate use of resources. It is important that the perception of the public and Parliament, through the PAC, are satisfied. In specific terms the future of audit is uncertain, however, given the facts identified in this report the demand for and the costs of auditing public sector organisations are likely to become more difficult to control. A key element in delivering effective audit will be the supply of a skilled audit workforce. There may be scope and a need for recruiting people from different professional backgrounds in order to support audit processes."

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