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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.

  • Marked by Teachers essays 5
  • Peer Reviewed essays 7
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  1. Unit 5 Introduction to Accounting

    Due to the said factors, internationalization of accounting standards is considered as a significant and essential part of the rapidly globalization economy. Recording transactions Accurate records are essential. If documents are lost of the business, the business could forget to demand payment for some jobs that already are done or another problem could be the payment of bills. These problems must be avoided at all costs because it could lead to bankruptcy. Monitoring activity and controlling the business Sound record keeping allows managers to keep track of orders, sales and bills.

    • Word count: 5880
  2. Investigating financial control for a new restaurant.

    Different types of Costs My warrens restaurant goods product for fixed cost and variable cost Fixed Cost Variable Cost Microwave Ovens and Microwave Grills- Quantity 4- price �2316.00 Food stock e.g. Flour, vegetables, ingredients �500 per stock Samsung Medium Duty Microwave CM1329 - Touch Control 1300W Stainless Steel quantity 2 - �918 Chair =Kentucky armchair Sizes: 550 mm- price �1470 Kitchen utility e.g. plates = LSA MIKA DINNER PLATE, SET OF 6, Glass = LSA YOLA TUMBLER SET OF 6, LSA ILYA CHAMPAGNE FLUTES SET OF 2 - price �895 This is the table for my fixed cost and variable

    • Word count: 3736
  3. What does Finance involve.

    This is an important part of my business because I will need to check on all the money I am spending and if I am not going over board with the cash flow. There are three main costs which my business will have, and then these three main costs are sub divided in to smaller costs. Below I will summaries how this works: 1. START-UP COSTS - Start up costs vary from many things. Start-up costs are the various costs which I will need to set up my business.

    • Word count: 6694
  4. Work placement at Family Mosaic.

    Is there anything you are worried or nervous about? I am worried that I might not carry out my placement effectively and I am also nervous that I might not be accepted in the working environment. P1 How organisations use ICT 1. Describe and give examples, of the ways in which the organisation uses ICT; try to find at least one example of each of the following: Presentation (promotional, technical) Manipulation of information (interpreting data, decision making) Communication (internal, external)

    • Word count: 5324
  5. Exploring business purposes

    All businesses exist for a purpose. They produce or supply goods, offer a service or do both. In this case, the purpose of the business is a service. In group two, I have decided to look up Virgin. I am going to answer the same questions above (as the same as group one) I have used the internet to help me answer the questions. I have research that Virgin is a leading branded venture capital organisation, is one of the world's most recognised and respected brands.

    • Word count: 4572
  6. Comsat case

    Because of this, using the risk-free rate is not always an accurate predictor of a firm's cost of equity. Using the firm's cost of debt is preferable to using the risk-free rate because it more accurately reflects the true financial risks faced by the company. Equity Risk Premium Based on the idea that an investor requires a high rate of return for assuming risk, a risk premium is added to the cost of debt. The risk premium is the difference between the cost of debt and the required return an investor would expect to take on greater risk. The risk premium is usually determined a number of ways.

    • Word count: 3940
  7. Portfolio analysis

    Amount invested in each company= �10,000. Week 2 In my 2nd week of Investment I had invested �10,000 in each company In my first company which was Sony. I had made a Decrease of �3.40 which was disappointing to see and I hope to see a big improvement in the future. The share price that was decreased was equivalent to 3.40. The total percentage of decrease is 61% I was really disappointed with this. My 2nd company that I had invested in was Tesco which made a �3.50 profit this made me very happy as I had made a good profit.

    • Word count: 4180
  8. Investment Portfolio - Shares and other investments

    Ethical Investments When you came to me for my services, you told me that the money you won at the Casino would be your last "dodgy harrah". You asked me to provide an overview of what is called ethical investing - that is, investing on the basis on what one thinks is morally right. There are several advantages to ethical investing; however there are also some disadvantages. One of the main points in favour is its benefit to society, as unmoral practices will not be able to generate profit if there is no investment in them, or it will become

    • Word count: 6241
  9. PEST Analysis

    There are three types of taxes that come under 'direct'. National insurance that is paid by both employer and employee, which contributes towards the social security system. Corporation tax that is paid by companies on their profits and finally Income tax that is paid by private individuals on the amount they earn. There are also three types of taxes that come under 'indirect'. Excise duties are additional taxes on top of VAT placed on certain goods such as cigarettes and alcohol.

    • Word count: 3988
  10. International Accounting Standarts

    When foreign companies are planning to launch their shares on the Wall Street (as the German Telecom), accounts must be balanced in the US-GAAP format. Not at least that circumstance lead to a new law in Germany, which allows listed entrepreneurships to hand in their annual balance in IAS or US-GAAP format.1 Also the EU tried to set up guidelines, to uniform accounting systems at least among EU members.2 However, those guidelines still did not become valid yet and are no real alternative to IAS or US-GAAP (since they are established already).

    • Word count: 3464
  11. Harmonisation of accounting standards in Europe

    The harmonisation process would therefore avoid any difficulties for multinational businesses to analyse accounts from different European countries. Especially investors and financial analysts need to be able to understand the financial statements of foreign companies when deciding to buy their shares. For them the statements from different countries need to be reliable and comparable. This means that harmonisation of accounting standards removes barriers to international capital flows by reducing differences in financial reporting requirements for actors in international capital markets and it reduces financial reporting costs for multinational companies so that they can achieve substantial savings on costs of recruitment,

    • Word count: 3425
  12. Complete Report on Askari Commercial Bank

    management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stakeholders, and contributing to society. Objectives * To achieve sustained growth and profitability in all areas of business. * To build and sustain a high performance culture, with a continuous improvement focus. * To develop a customer-service oriented culture with special emphasis on customer care and convenience. * To build an enabling environment, where employees are motivated to contribute to their full potential.

    • Word count: 20225
  13. Financial Services

    cash-flow forecast, and an assessment of their financial needs, I also need to identify the financial service needs of a business, and explaining how the size of an organization can be a significant factor. The final part of the report will include how the advances of technology has affected the level of customer service provided to all three customers by the financial service providers, and I also need to explain how the financial service providers chosen in the report are regulated under current legislations.

    • Word count: 3378
  14. My hypothesis is that the top 3 sets (A, B and C) predict both the size of the angles and the lengths of the line better than the middle 3 sets

    When I kept clicking random on the calculator again and again, I noticed two things. Firstly, all the numbers I got were 0?n<1 and secondly all the numbers went up to 3 decimal places. This means I can get 0-0.999 so there are 1,000 random numbers (including 0). As I will get a lot of decimal places I need to choose a way of making them whole numbers. There are two ways I could do this. These are * I could truncate * I could round the numbers.

    • Word count: 3465
  15. The role of a conceptual framework

    and West, C. (2004), Essentials of Financial Accounting in Business, Thomas Learning, London, pg .303). Another reason for the setting up of the International Accounting Standards Board is because in certain countries the accounting professional has a real impact on what businesses producing. For example the "...UK has a very strong accounting profession that has been active in promoting better accounting practices" (Bendrey, M., Hussey, R. and West, C. (2004), Essentials of Financial Accounting in Business, Thomas Learning, London, pg.303).

    • Word count: 3071
  16. Mr Carter has requested that I research the financial needs of potential and current Canada Life customers based on their stage in life. I have been given seven generic stages life stages.

    They might borrow money i.e. a student loan for university or for living expenses. Some people in this age group work; it is common to be a part-time job because they are students. This limits the amount of money they have and they find themselves often short of money. An overdraft would be used during times they are short of money. The appetite to risk here is medium because someone may have inherited a large amount of money and may want to spend it. At this stage majority they have no intention of investing as they have little money and the fact that they have focused their mind into their education.

    • Word count: 4990
  17. This paper discusses the statement 'in a politically charged rulemaking environment, conceptual frameworks has only limited utility'.

    Definition The Australian Accounting Research Foundation (AARF) CF has been described as: Statements of Accounting Concepts set out the concepts which has been adopted by the AASB and PSASB in respect of the nature, subject, purpose and broad content of general purpose financial reporting in the private and public sectors (Para3, Policy Statement 5 (PS5)). Nature and purpose of a CF The CF is a body of interrelated objectives and fundamentals. The objectives recognise the goals and purposes of financial reporting and the fundamentals are the underlying concepts that help accomplish those objectives.

    • Word count: 3444
  18. Financial Services

    a cash-flow forecast, and an assessment of their financial needs, I also need to identify the financial service needs of a business, and explaining how the size of an organization can be a significant factor. The final part of the report will include how the advances of technology has affected the level of customer service provided to all three customers by the financial service providers, and I also need to explain how the financial service providers chosen in the report are regulated under current legislations.

    • Word count: 9439
  19. theory of banking

    Banks themselves are continuously evolving. Therefore, although the traditional factors that give rise to the existence of banks are become less powerful; banks are still survive in a different way. Finally, section 7 contains concluding remarks. 2. The definition and natures of banks To begin the analysis of the theoretical rational of the existence of banks, let's first look at the definition of bank. "They perform an intermediary role in an economy, by accepting deposits and making loans." (Shelagh A Heffernan,1996)

    • Word count: 4529
  20. Accounting and Finance

    In the liability section, as follows as the increasing retained profit, in 20x9 shareholders equity (reserves) also climbed a lot. As far as we considered the financial ratios (Table1), from 20x7 to 20x9 the profitability ratios improved dramatically due to the less cost of sales and operating expense. The liquidity ratios become worse, because the growing fixed assets resulted in the lack of liquid asset. The following part is going to compare financial performance with its major rival, Sun See Chemical Industry.

    • Word count: 3695
  21. The Purpose of Keeping Accurate Accounts

    Raise finance - can support businesses wanting to raise money by comparing the accounts and to pay of expenses. Need to raise finance to show bank manager for a successful bank loan. Good records are essential for the preparation of current financial statements, such as the Income Statement (Profit and Loss) and the Cash Flow Projection. These, in turn, are critical for maintaining good relations with your banker. They also will present a complete picture of your total business operation which will benefit you as well. Comply with statutory requirements - the Accounting Standards Board issues accounting standards. The Statement of Standard Accounting Practice (SSAP)

    • Word count: 6912
  22. With reference to the local area would the opening of a new business represent a sound business decision?

    Also I will show the locations on a map, I will do one map showing all 3 three locations and another of the area of the property I have chosen outlining all other shops in the area. As well as that I will put the information gathered e.g. rent, size, headcounts, location/area, parking space, etc into a table and compare each characteristic. Finally after looking at all the data I will make my decision about which property I will use.

    • Word count: 5116
  23. FINANCE ASSIGNMENT

    The common law system that originated in England is developed from case law. The main characteristic of common law is that it is a law of precedence. The judgements passed in various cases are used for other cases with similar facts."(Walton, Haller and Raffournier, 2003, pg11)." A common law rule seeks to provide an answer to a specific case rather than to formulate a general rule for the future."(Nobes and Parker, 1995,pg 11). "In a common law situation accounting rules are not a part of the law. Company law in the common wealth countries is kept to a minimum.

    • Word count: 4093
  24. Identifying and describing the main financial service needs for a student starting at university

    If you prefer, you can use their online transfer pack to help you move your account to them. A special switcher's overdraft for 120 days of up to �2,500, interest and charge-free. Interest and charge-free arranged overdraft of up to �100. Use of virtually all the cash machines in the UK with no Halifax charge. Switch debit card and cheque book with �100 cheque guarantee facility. Cirrus and Maestro facility on your card which allows you to use cash machines and pay for goods and services abroad. Halifax has Card cash which is an easy, straightforward alternative to Current Account.

    • Word count: 10921

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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