2.4- Making financial decisions

Question 1

What is gross profit?

Answer 1

Profit after deducting costs

Question 2

What is net profit?

Answer 2

Profit after accounting for all expenses

Question 3

What can net and gross profit margins be used for?

Answer 3

To compare with previous data or competitors

Question 4

Is high or low net/gross profit margin best?

Answer 4

High

Question 5

What is average rate of return (ARR)?

Answer 5

A quantitative method to identify which investment is most profitable

Question 6

Is a higher or lower ARR better?

Answer 6

Higher as investment will generate higher return on money spent

Question 7

Disadvantage of ARR?

Answer 7

Figures are based on predictions

Question 8

Infographic def?

Answer 8

Graphic representation of data that is catchy and attractive to look at

Question 9

3 things that numerical data can be used for?

Answer 9

-Comparing performances w competitors
-Monitor performance
-Set goals or targets

Question 10

2 ads of financial data
&
3 dis of financial data

Answer 10

-Easy to see trends, helps business decisions
-Helpful to communicate with shareholders
*Statistics can be manipulated
*Other factors may be more important
*Normally out of date