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When the goal units are money [8] (in for-profit businesses), throughput is net sales (S) less totally variable cost (TVC), generally the cost of the raw materials (T = S – TVC). Note that T only exists when there is a sale of the product or service. Producing materials that sit in a warehouse does not form part of throughput but rather ...
A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by earnings before interest, taxes, depreciation and amortization and EBIT), and then determines the optimal use of debt versus equity (equity value).
The square brackets contain the cost of goods sold, wq not cost of good made wx where x = cost of good sold. To show cost of good sold, the opening and closing finished goods stocks need to be included The profit model would then be: Opening stock = g o w = opening stock quantity × unit cost; Cost of stock = g 1 w = closing stock quantity × ...
Total revenue is the total receipts a seller can obtain from selling goods or services to buyers. It can be written as P × Q , which is the price of the goods multiplied by the quantity of the sold goods.
Total Revenue = Price X Quantity of goods; Average Revenue = TR / Quantity of goods; Total Product = AP X Variable Factor; Profit = TR – TC or (P-ATC)*Q; Loss = TC – TR (if positive) Break Even Point: value of Quantity of goods where Average Revenue = Average Total Cost; Profit Maximizing Condition: Marginal Revenue = Marginal Cost
All units produced are sold (there is no ending finished goods inventory). When a company sells more than one type of product, the product mix (the ratio of each product to total sales) will remain constant. The components of CVP analysis are: Level or volume of activity. Unit selling prices; Variable cost per unit; Total fixed costs
Revenue-based financing relies on your revenue more than your creditworthiness to determine your eligibility for a loan. In some cases, it may be repaid through a percentage of your sales.
This would result in a fictitious profit in the sale period and a fictitious loss in the payment period, both equal to the cost of goods sold. Period costs , such as office salaries or selling expenses, are immediately recognized as expenses and offset against revenues of the accounting period .