ESB - Domain 4 exam questions and answers.

Selling price formula (cost x desired profit margin) + cost Profit margin formula (percentage/100) = decimal Balance sheet A financial statement that reports assets, liabilities, and owner's equity on a specific date. Equity Assets - Liabilities Net income total income - cost of goods sold - expenses Gross profit income - cost of goods Income tax expense Gross profit x tax rate Break even point total monthly cost / selling price Burn rate month starting balance - month ending balance ending cash balance total cash - total cost run rate current revenue x 12 net profit value of investment - cost of investment Return on Investment Net profit (cost of investment) x 100 Operating budget budget for day-to-day expenses Return on Investment (ROI) Used by businesses to show how much their investments are earning. Desired Profit Margin The percentage the business wants to earn on products or services Selling Price The price of the product or service you are buying. Selling price=(cost x desired profit margin)+ cost Liabilities money owed to others Income Statement A financial statement showing the revenue and expenses for a fiscal period. Account Receivables amounts due from individuals and companies that are expected to be collected in cash fixed costs costs that remain constant as output changes variable costs costs that vary directly with the level of production Crowfunding Raising small amounts of money from a large number of people using online platforms. Angel Investors wealthy individuals in the business community willing to risk investment funds in financing business for equity or stake in the business venture income where revenue is coming from Cost of Goods Sold the total cost of merchandise sold by labor and material cost during the period Expenses total income - cost of goods sold - expenses burn rate the rate at which a company is spending its capital until it reaches profitability run-rate used to make projections about the companys future performence