BU121 Lecture Notes - Monocle, Fixed Cost, Top Hat
Document Summary
Businesses that show a profit can still go bankrupt. Creating a statement of cash flows: adjust profit to show impact on cash (don"t memorize but instead try to understand it because there is too much to memorize) Cash survival breakeven is when ebdat = 0. Calculate ebdat (tells you a push before you breakeven) Top hat monocle question: cash and profit are not the same thing because. Sales revenue on the income statement is not necessarily received: which of the following would have a positive impact on cash. All of cash expenses covered therefore 500, 000 300 000 = 200 000 where 200 000 150. 000 = 50 000 10 000 = 40 000: you forecast your sales revenue for january of 000. 20 because 4000 time 6% and divide it by months. To be liquid you need to generate enough cash to pay bills (problem is you use money to invest inorder to make money)
