2.3.1 Profit

Question 1

What three things does a statement of comprehensive income show?

Answer 1

gross profit
operating profit
profit for the year

Question 2

Calculation for gross profit?

Answer 2

revenue - cost of sales

Question 3

Calculation for operating profit?

Answer 3

gross profit - other operating profit

Question 4

Calculation for profit of the year?

Answer 4

operating profit - tax

Question 5

Define a profit and loss account?

Answer 5

measuring financial performance of a business summarising transactions

Question 6

Define profitability?

Answer 6

describes ability of firm to generate profits

Question 7

What is profit margin?

Answer 7

% of turnover that is profit

Question 8

Calculation of gross profit margin?

Answer 8

Gross profit
—————– x 100
Turnover

Question 9

Calculation of operating profit margin?

Answer 9

operating profit
———————- x 100
turnover

Question 10

3 ways to improve profitability?

Answer 10

reduce costs
motivate employees
rise prices

Question 11

3 ways of increasing profitability?

Answer 11

Improving standard of production
productivity
reduce costs

Question 12

Define cash?

Answer 12

form of money firm would include as assets