4. Basic Financial Terms 1. Missing words 1.1 R__________________ is the value of sales made within a trading period. To calculate it, multiply the number of sales by the p______________. In order to work out profit, you need to deduct total ____________ from revenue, e.g. revenue = £80, total costs = £55 therefore profit is £_______. 1.2 To calculate total costs, you must first separate out fixed costs from _____________ costs. Fixed costs do not change in relation to output, for example rent or interest charges on a firm's loans. Variable costs vary in proportion to _____________, for example if a shop's sales rise by 20%, it needs to buy 20% more stock from its suppliers. 1.3 Profit is the surplus of revenue over the firm's total _____________. If costs are greater than revenue, the firm makes a ______________. 2. Matching the two lettered points to each term, e.g. 2.1 a) g) Terms

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Factors

Factors

2.1 Price

a) The number of units bought by customers

f) The £s value of all the sales made by the business

2.2 Sales

b) All the revenues minus all the costs

g) The firm’s expenditure on materials, wages, rent and much more

2.3 Revenue

c) All the revenue divided by number of units sold

h) The amount left from the revenue, after all costs have been accounted for

2.4 Costs

d) Goods sold, measured in volume terms, such as 10,000 cars

i) All the income from selling to customers, without counting the costs

2.5 Profit

e) All the spending on operating the business

j) The amount charged to customers per unit sold

3. Explain why: 3.1 Even a business with £1 million of revenue might not make a profit. _________________________________ ______________________________________________________________________________________ 3.2 It might be possible to make a higher profit by charging a lower price.________________________________ ______________________________________________________________________________________ 3.3 Cutting costs might not lead to higher profits. _________________________________________________ ______________________________________________________________________________________ ______________________________________________________________________________________ 4. Fill in the gaps: 4.1 If _________________ is higher than costs, the business will make a __________________. 4.2 If costs fall while revenues stay the same, the business will make a bigger _______________. 4.3 A loss is made when revenue is _______________ than costs. 4.4 If sales remain unchanged when the price goes up, both __________________ and _________________ increases. www.a-zbusinesstraining.com