Unit F: Finance

Summary


Feasibility

    • A business is feasible when it is sustainable and profitable.
    • Three aspects to the feasibility of a business are
      • location
      • market
      • competition

    Start-up and Operational Expenses

    • Start-up costs occur before opening the business.
    • Operational expenses are the ongoing costs of a business, such as rental of space, equipment, and salaries.

    Number of Payments and Payment Amount

    • To find the number of the monthly payments use the Number of Monthly Payments Calculator.




    • To find the monthly payment, use the Monthly Payments Calculator.




    • When deciding on a loan, consider
      • the payment amount
      • number of payments
      • the total amount of the loan or the interest paid on the loan.

    Expenses

    • The sales revenue of a business is the amount earned before expenses are subtracted.
    • Operating expenses can be fixed costs or variable costs.
    • Fixed costs are predictable amounts that occur on a regular basis.
    • Variable costs change in amount or frequency.

    Sales Revenue

    • The formula used to calculate the net income is
      net income = revenue â€“ expenses
    • When the sales revenue is greater than expenses, the net income will be positive and the business makes a profit.
    • When the sales revenue is less than expenses, the net income will be negative and the business has a loss.
    • When the sales revenue equals the expenses, the net income is zero and the business hits the break-even point.