2.4- Making financial decisions Flashcards
1
Q
What is gross profit?
A
Profit after deducting costs
2
Q
What is net profit?
A
Profit after accounting for all expenses
3
Q
What can net and gross profit margins be used for?
A
To compare with previous data or competitors
4
Q
Is high or low net/gross profit margin best?
A
High
5
Q
What is average rate of return (ARR)?
A
A quantitative method to identify which investment is most profitable
6
Q
Is a higher or lower ARR better?
A
Higher as investment will generate higher return on money spent
7
Q
Disadvantage of ARR?
A
Figures are based on predictions
