2.4 | Making financial decisions Flashcards
give the formula for gross profit
gross profit= revenue- cost of sales
give the formula for gross profit margin
gross profit/sales ( revenue) x 100
give the formula for net profit
gross profit - other expenses
give the formula for net profit margin
net profit/sales revenue x 100
give the formula for average annual profit
total profit/number of years
give the formula for average rate of return
average annual profit / cost of investment x 100
give 4 things financial data can help inform businesses
- costs and revenues
- gross and net profit
- profit margins
- cash flow
give 2 benefits and limitations to financial data
- enables a business to see trends and make comparisons to see what products are most profitable
- can share this data with shareholders or potential lenders
limit: - can only be used after it has been collected thus always out of date
- it only shows financial success which is not the only indicator of success
how can marketing data help business make decisions
- gives an indication oh how customer preferences are changing
- a business can use this to see if their decision is likely to lead to increase in sales
define market data a
information about the characteristics that make up a particular market.
give two factors of market data and what they affect
- economic factors
- demographic factors.
- they show what affects the behaviour of consumers and the level of demand for goods
give 4 economic factors
- consumer incomes
- exchange rates
- inflation
- unemployment rates.
why is demographic factors useful
useful for business decision-making as a business can target their products to different demographics
give things business should ensure when making business decisions
It is important to ensure that any information used is:
accurate
sufficient
up to date
