2.4-Making financial decisions

Question 1

What are the ways that a business can increase profits?

Answer 1

• Increasing revenue

- Reducing costs

Question 2

What is the formula for gross profit?

Answer 2

Gross profit= sales revenue — cost of sales

Question 3

What is the formula for gross profit margins?

Answer 3

Gross profit margin(%)=gross profit/sales revenue*100

Question 4

What is the formula for net profit margins?

Answer 4

Net profit margin(%)= net profit/sales revenue *100

Question 5

What are the advantages and disadvantages of financial data?

Answer 5

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-Allows a business to access its financial security

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• Data can only be used after the event has happened
• Data doesn’t aid decision making much
• Data can be interpreted in many different ways
• It only shows the financial position of the business
• It doesn’t take qualitative factors into account