2.3.1 Profit Flashcards
1
Q
gross profit
A
revenue - COGS = gross profit
2
Q
operating profit
A
gross profit - operating expenses = operating profit
3
Q
net profit
A
operating profit - all other costs
4
Q
profitability - GPM
A
GPM = GP ÷ revenue x100
if GPM low = sales in decline
- not managing cost of sales effectively
5
Q
OPM
A
OPM= OP÷ Rev X100
if opm falling - not managing operating expenses effectively
- sales in decline
6
Q
NPM
A
NPM = NP ÷ Rev X100
low NPM = GP or OP in decline
- taxation rates changed
7
Q
Improving profitability
A
increasing revenue - increase selling price brand aware ness marketing add value
reduce costs eliminate unprofitable processes capacity improve efficiency reduce pollution
