APPENDIX A

Glossary

To establish a common set of terms that we use in this book, we offer the following.

Breakeven

Breakeven has traditionally been defined in at least five different ways. The five ways use different data to bring you to break even.

1.Net income equals zero.

2.Total revenue equals total costs.

3.Total revenue equals total variable costs plus total fixed costs.

4.Total contribution margin equals total fixed costs.

5.Net present value equals zero.

Business Model

A business model is your plan for your business, briefly expressed in simple terms and simple structure. It may be written in outline form or as bullet points. The concepts and calculations of breakeven and cost-volume-profit analysis (explained later), as part of your ...

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