Learn: Financial Calculations in Business

Welcome!Today we'll explore financial calculations for businesses, including costs, revenues, profit, and break-even analysis. These concepts are vital for understanding how businesses manage money and make decisions.

Understanding CostsCosts are the expenses a business incurs to operate. They can be divided into fixed costs (e.g., rent, salaries) that do not change with output, and variable costs (e.g., raw materials) that increase as production rises.

RevenueRevenue is the income a business earns from selling goods or services. It is calculated by multiplying price by quantity sold. For example, if a product costs £10 and 100 units are sold, the revenue would be £1,000.

ProfitProfit is the money a business makes after deducting all costs from its revenue. The formula is: Profit = Revenue - Total Costs. Positive profit means the business is doing well financially.

Break-Even AnalysisBreak-even point is when a business's revenue equals its total costs, meaning no profit or loss is made. This is useful for understanding the minimum sales needed to cover costs.

Review Time!Well done! You've learned about calculating costs, revenue, profit, and break-even analysis. Let's test your understanding with a few questions.