2.4: Making financial decisions Flashcards
1
Q
How do you calculate gross profit
A
Sales revenue-Cost of sales
2
Q
How do you calculate net profit
A
Gross profit-Operating costs
OR
Sales revenue-Total costs
3
Q
How do you calculate profit margins
A
Gross/Net profit//Sales revenue x 100
4
Q
How do you calculate average rate of return
A
Average annual profit/Cost of investment (x100)
5
Q
What is ARR used for
A
To check whether an investment is worthwhile
6
Q
How can quantitative data be used in a business
A
- Monitoring performance
- Comparisons to competitors
- Identify trends and anticipate customer needs
- Business decisions
- Set aims/objectives
7
Q
What can graphs/charts made from quantitative data be used for
A
- Finding correlations
- Represent proportions
- Show trends over time
- Forecasts
- Measure performance
- Identify odd factors/events and their impacts
8
Q
What are some examples of marketing data
A
- Customer satisfaction ratings
- Customer opinions
- Customer visits
9
Q
What are some examples of financial data
A
- Sales/revenue
- Costs
- Financial accounts
- Interest rates
- Tax rates
10
Q
What are some examples of market data
A
- Demographics
- Number of competitors
- Size of market
- Growth of market
11
Q
What are some limitations of financial data
A
- Based on past or future performance
- There aren’t any reasons
- Statistics can be manipulated
- Other qualitative factors
