2.3.1 Profit Flashcards
What is the defintion for Profit?
Profits are the surplus of revenue over costs
What is the calculation to find Profit?
total revenue – total costs = Profit
What are the three types of Profit?
Gross profit
Operating profit
Profit for the year (Net Profit)
What is a Statement of comprehensive income?
A formal financial document that summarises a business’ trading activities and expenses to show whether it has made a profit or loss
What is the calculation for Gross profit?
Gross profit = sales revenue – cost of sales
How do you calculate Operating profit?
Operating profit = gross profit – expenses
What is Gross profit?
Gross profit is a company’s profit before operating expenses
What is Operating profit?
a profit from business operations before deduction of interest and taxes
What is Profit for the year?
The ammount of profit th copmany made in a year
What is Profitability?
Profitability measures the financial performance of a business by comparing profits achieved to a second variable e.g. revenue
What are the 3 profitability ratios?
Gross profit margin
Operating profit margin
Profit for the year (net profit) margin
What is Gross profit margin?
Gross profit margin (GPM) is a measure of a firm’s profitability by looking at the relationship between gross profit and sales revenue
How do you calculate Gross profit margin?
Gross profit / Sales revenue x 100
What is Operating profit margin?
Operating profit margin (OPM) is a measure of a firm’s profitability by looking at the relationship between operating profit and sales revenue
What is the calculation for Operating profit margin?
Operating profit / Sales revenue x 100
