CASH COST Meaning and
Definition
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Cash cost refers to the monetary amount that represents the total expenses incurred by a company or individual in producing goods or services. It specifically focuses on the immediate outflow of cash required to cover the direct costs associated with the production process. Cash cost is an essential financial metric used in business management and analysis to assess the profitability and viability of operations.
Typically, cash cost includes the direct expenses related to raw materials, labor, utilities, and other direct production costs. It excludes indirect or overhead costs, such as administrative expenses, marketing costs, and rent. The purpose of isolating these direct costs is to evaluate the immediate cash obligations tied to the production process.
Calculating cash cost involves summing up the cash expenditures incurred in the production cycle and dividing it by the number of units produced. This helps determine the cash outflow per unit of production, aiding in cost control and decision-making. By monitoring cash costs, companies can identify opportunities for cost reduction, optimize production processes, and improve profitability.
In financial analysis, cash cost can vary across industries and can be compared among competitors to gauge efficiency and competitiveness. It is important to consider the cash cost alongside other financial indicators to gain a comprehensive understanding of the company's performance and financial health.
Common Misspellings for CASH COST
- cas cost
- xash cost
- vash cost
- fash cost
- dash cost
- czsh cost
- cssh cost
- cwsh cost
- cqsh cost
- caah cost
- cazh cost
- caxh cost
- cadh cost
- caeh cost
- cawh cost
- casg cost
- casb cost
- casn cost
- casj cost
- casu cost
Etymology of CASH COST
The term "cash cost" does not have a specific etymology as it is a combination of two separate words.
1. Cash: The word "cash" is derived from the Middle French word "caisse", which means money. It entered the English language in the 16th century and refers to physical currency or money in hand, as opposed to other forms of payment like credit or checks.
2. Cost: The word "cost" originates from the Latin word "constare", which means "to stand together" or "to be fixed". It evolved through Old French and Middle English, referring to the price or value of something, often in terms of money or resources required to obtain it.
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