Exam (elaborations)
ESB V2 Domain 4, Lesson 2 & 3 (1)
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ESB V2 Domain 4, Lesson 2 & 3 (1)
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ESB V2 Domain 4, Lesson 2 & 3Fixed Costs - ANS-costs that do not vary with production or sales level
Variable Costs - ANS-costs that vary with the quantity of output produced
Cash Flow - ANS-the difference between cash coming in and cash going out of a business
Formula for cash flow - ANS-Total cash - total expenses
Return on investment - ANS-the percentage of the total cost of purchasing an investment and
the profit made from selling that investment
Formula for Return on Investment - ANS-Profit from investment / cost of investment x 100
Burn rate - ANS-A calculation used to measure a business's monthly cash flow.
Run rate - ANS-A calculation used to make projections about a company's future performance.
Formula for Burn Rate - ANS-Beginning balance - Ending balance
Formula for run rate - ANS-revenue x 12
Startup cost - ANS-the cost associated with beginning a business
Operating budget - ANS-A budget that states how managers intend to use organizational
resources to achieve organizational goals.
Bootstrapping - ANS-Using your own savings to start a business
SBA - ANS-Small Business Administration
Timeframe to repay SBA real estate loan - ANS-25 years
Timeframe to repay SBA inventory/equipment loan - ANS-10 years
Angel investor - ANS-a wealthy individual willing to invest in return for equity in a new venture
Crowdfunding - ANS-raising money for a project or venture by obtaining many small amounts of
money from many people
Formula for Net income - ANS-Revenue - Expenses - COGS
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