2.3.1 Profit

Question 1

What is the profit?

Answer 1

The capital made once the costs have taken away from the revenue

Question 2

What is Gross profit?

Answer 2

This is the profit that is made when the cost of sale is taken away from the sales revenue.

Sales revenue - cost of sales

Question 3

What is the formula for Gross Profit Margin?

Answer 3

Revenue - Cost of Sales / Revenue

Question 4

What is Operating profit?

Answer 4

The capital left over after all business operations have been taken away

Gross Profit - Overheads

Question 5

Operating Profit Margin formula

Answer 5

Revenue - Total cost / revenue

Question 6

What is Net Profit?

Answer 6

This the profit left over after all costs and taxes have been taken away

SALES REVENUE - COST OF SALES - OVERHEADS - FINANCE COSTS - ANY OTHER EXCEPTIONAL ITEMS

Question 7

Net Profit Margin

Answer 7

Net profit / Revenue X 100

Question 8

Which is better a high margin or low?

Answer 8

High

Question 9

How to boost margins/ profits

Answer 9

Gross Profit = Increase price, Cheaper suppliers

Operating Profit = Find a cheaper location, cut marketing costs , Lower the wage bill

Net Profit = Cut down on finance costs such as interest