Class 12 Entrepreneurship: Business Arithmetic
Chapter 5: Business Arithmetic — master the numbers of business with unit pricing, break-even analysis, cash flow projections, budgeting, working capital, inventory control with EOQ, and return on investment. CBSE Class 12 Entrepreneurship notes covering 7 topics: Unit of Sale Unit Price and Unit Cost, Break-Even Analysis for Multiple Products, Cash Flow Projections, Budgeting and Managing Finances, Working Capital, Inventory Control and EOQ, and Return on Investment and Return on Equity.
Topics(5)
Unit of Sale, Unit Price and Unit Cost
Concept of unit of sale, calculation of unit price and unit cost, gross profit or gross margin per unit, with exercises from a stationery store, beauty parlour and restaurant. CBSE Class 12 Entrepreneurship notes
Break-Even Analysis for Multiple Products
Break-even point for single and multiple products using the weighted average and contribution margin approaches, and the sales mix concept. CBSE Class 12 Entrepreneurship notes
Working Capital
Need for fixed assets vs working capital, the operating cycle or cash conversion cycle, trading vs manufacturing business cycles, and gross vs net working capital. CBSE Class 12 Entrepreneurship notes
Inventory Control and EOQ
Types of inventory, inventory item characteristics, Pareto's 80/20 principle, ABC analysis, and the calculation of economic order quantity. CBSE Class 12 Entrepreneurship notes
Return on Investment and Return on Equity
ROI and ROE formulas, all-equity vs leveraged comparison, and an introduction to EBITDA. CBSE Class 12 Entrepreneurship notes
Questions by Textbook
Study Simplify Special
Frequently Asked Questions
Calculate the Return on Equity (ROE) for Neerja International, for the year 2020 – 2021 from the details given below : Details / Amount (₹) i. Investments 10,00,000 ii. 12% Loan from State Bank of India 2,00,000 iii. 8% Debentures 2,00,000 iv. Fixed expenses per month – Salary 1,50,000; Rent 50,000; Electricity & Utilities 10,000 v. Depreciation 35,000 vi. Tax Rate 30% Monthly Sales revenue was ₹ 10,00,000 and Cost of goods sold was ₹ 4,00,000.
MM Ltd. is a renowned name in manufacturing hand puppets for children. Its two most selling varieties are Alphabets and Domestic animals. Sales price/unit: Alphabets Rs.210, Domestic Animals Rs.360. Variable Cost/unit: Alphabets Rs.140, Domestic Animals Rs.190. Sales mix: 40% Alphabets, 60% Domestic Animals. The fixed expenses of MM Ltd. is Rs.75,000. The weighted contribution for the two products will be:
Ryan started a mask manufacturing business with his Brother. With planning and hard work, they were able to sell 5000 masks in the first year. But they did not earn any profit. Both were happy because they were not at loss either and the revenue generated was equal to the cost. Now they were moving towards earning profit in the second year. Out of the following, identify the component of the financial plan discussed above.
Karuna manufactures hair oil through her company Glider oils. Net income earned = Rs.8,40,000, Equity = Rs.4,00,000. Return on equity will be:
The Fancy Store, a ready-made garments retail shop sold 10,000 shirts at Rs.400 per shirt during the year. Cost of placing an order and receiving goods is Rs.2,000 per order. Inventory holding cost is Rs.1000 per year. Calculate the Economic Order Quantity for The Fancy Store.