2.4.1 Business Calculations Flashcards
1
Q
What is gross profit
A
The profit being made by a business after taking away variable costs
2
Q
Gross profit formula
A
Revenue - Variable Costs = Gross Profit
3
Q
Gross profit margin formula
A
(Gross profit / Revenue) x 100
4
Q
What is net profit
A
Profit after all costs have been covered
5
Q
Net profit formula
A
Revenue - Total costs
6
Q
Net profit margin formula
A
(Net Profit / Revenue) x 100
7
Q
What is ARR
A
A method used to identify whether an investment will be profitable
8
Q
ARR Formula
A
(Average Annual Profit / Initial Investment Cost) x 100
