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Business Mathematics Chapter 2, Section 5-9: Inventory Turnover, Break-Even Point

Business Mathematics Chapter 2: Managing Your Business
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Terms to Know:
Section 5: Inventory Turnover
  • The inventory turnover is a measure of how many times the value of inventory is sold in one year.
  • Inventory Turnover = Cost of Goods Sold / Average Inventory.
  • Inventory Turnover = Net Sales / Average Inventory
Section 6: Break-Even Point
  • The break-even point is the point at which you stop losing money.
  • Fixed costs remain the same no matter how many items are produced.
  • Variable costs increase with the number of items produced.
  • Parallel lines are lines that are equidistant apart at all points.
  • Intersecting lines are lines that cross each other.
PEMDAS
  • Parentheses
  • Exponents
  • Multiplication
  • Division
  • Addition
  • Subtraction
Section 7: Break-Even Point Using the Formula
  • Break-even point = Total fixed costs / Selling Price - Variable Cost/Unit
Section 8: Trade Discount
  • The list price is the suggested retail price.
  • The price paid after the discount has been subtracted is the net price.
  • The trade discount is a percentage of the list price.
  • A percentage of a number is a part of the number given in one-hundredth parts.
  • When working on a chain discount problem, you must find each discount separately.
Section 9: Trade Credit
  • Trade credit allows you to buy merchandise from a supplier and pay at a later specified date.
  • The invoice is an itemized shipping bill listing goods, prices, shipping charges, and any other charges that apply.
  • E.O.M. is an abbreviation for the end of the month and means that the discount period and the credit period start from the end of the month in which the sale was made.
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