2.3 profit Flashcards
profit
sales-costs= food to grow
gross
reveenue-cost of sales
profit on trading act
operating
gross-fixed overheads
ex other operating expenses
net
operating- financing(tax and int)
actual for year
statement of comprehensive income
by large plc communicates rev generated and costs inccured
profitablity
Measures financial perform by comparing profits achieved to a 2nd variable
GP
GP/SALESX100
indicator to analyse performance of trading act eg viable prod
but no indirect costs
low= not managing cost of sales effecitvely
OPM
OPM/SALESX100
analyse profit ag others or over time
not managing exp
NPM
NP/SALESX100
how effectively it performed over the year and potential for dividends
but tax unpaid
int changes
uses of pm
change in sales rev, direct costs of sales, how well it manages operating cost,profitablity, unusual inc
profit improved
increased revenue and decreased costs
reduce prod range, outsource non essential
impacts
same q high price- USP
more q same price- compete so adv=costs
same q same price= red quality
increase revenue
inc price
dec dependent on PED
Awareness through marketing
add value for features
decrease costs
dec prod costs, overheads so cheap loc
improve efficiency and eliminate process
reduce vc for better deals
why unprofitable?
no demand, wrong price,low con per unit, poor mgt of costs, expansion eg retained unavailable as dividends
cash vs revenue
cash=money in through many sources eg share capital, loan sale and leaseback
rev=value of sales made from 1 source
cash vs profit
profit is made through sales
what can tesco do to be profitable?
rent and restructure finance less debt and int
profit ratios
against rival or past data
increase quantity
+high sales,high ms
-depends on ped,capacity, fc
-comp respond, marketing fail,
incraese price+
+high sale, max value= quality
-depend on ped and if consm switch
reduce vc
+high pm and unnoticed price change
-depdends on persuasion, quality, efficiency
-low quality and more wastage
increase prod output
+max share of market demand and fc spread
-depend capacity,demand,,fc prod quality
reduce fc
reduces be
-reduce ability to make sales eg low morale of redundancy
