Financial terms and calculations revision notes

A cost that changes in direct proportion to the level of output or activity.

The total amount of money received from sales of goods or services before any costs are deducted.

The average rate of return is the ratio of total net cash inflow from an investment to its initial cost, expressed as a percentage.

The average rate of return is the percentage of profit earned on an investment relative to the initial cost of that investment.

The level of output at which total revenue equals total costs, resulting in zero profit.

The level of sales at which total revenue equals total costs, resulting in zero profit.

The level of output at which total revenue equals total cost, resulting in zero profit.

The break-even point is the level of sales at which total revenue equals total costs, resulting in zero profit.