UGBA 10 Lecture Notes - Lecture 9: Asset Turnover, Cash Flow, Income Statement

• School: Berkeley
• Department: Business Administration Undergraduate Program
• Course: UGBA 10
• Professor: John Briginshaw

Document Summary

Sales/revenue: income generated from the sales of goods/services. Total cost (tc): cost incurred to produce goods/services. Fixed cost (fc): cost that does(cid:374)"t (cid:272)ha(cid:374)ge (cid:271)ased o(cid:374) a(cid:373)ou(cid:374)ts of goods o(cid:396) se(cid:396)(cid:448)i(cid:272)es produced. Variable cost (vc): cost that changes based on goods/services produced. Break-even point (bep): sales amount in units or revenue required to cover the (cid:272)o(cid:373)pa(cid:374)y"s fc a(cid:374)d vc. Total profit at bep is equal to zero. Break-even units: number of untis that should be sold to achieve bep. Contribution margin (cm): represents incremental profit earned for each unit sold. Cm = unit revenue unit variable cost. Bep is equal to fc divided by cm. Measures the operating performance at a point in time. Fundamental accounting equation: assets = lia(cid:271)ilities + sha(cid:396)eholde(cid:396)s" e(cid:395)uity. Sha(cid:396)eholde(cid:396)s" e(cid:395)uity: sha(cid:396)eholde(cid:396)s" e(cid:395)uity assets (cid:894)(cid:449)hat you o(cid:449)(cid:374)(cid:895) (cid:373)i(cid:374)us lia(cid:271)ilities (cid:894)(cid:449)hat you o(cid:449)e(cid:895) The income statement measures the operating performance of a company during a period of time e. g. monthly, quarterly, annually.