2.4.1 Business Calculations

Question 1

Name the 2 Different Types of Profit?

Answer 1

• 1) Gross Profit.
• 2) Net profit.

Question 2

Write a Definition of gross profit?

Answer 2

• Gross profit is the Profit made by a business before any operating expenses or interests are deducted.

Question 3

Write a Definition of Cost of Sale and Net Profit?

Answer 3

• Cost of sales is the total all all costs used to crate the product or service that has been sold.
• Net Profit is the profit the business generates after all other Operating expenses and Interest has been paid.

Question 4

Write the Formula for Gross Profit?

Answer 4

Sales Revenue - Cost of sales

Question 5

Write The Formula for Net profit?

Answer 5

Gross Profit - Other Operating Expanses and Interest

Question 6

Write a Definition of Profit Margins?

Answer 6

• Profit Margins is reviewing the gross and net profit figures. This will tell business owners/,mangers how much profit a business has made in a Specific time period.

Question 7

Write The Formula of Gross profit Margin?

Answer 7

Gross Profit ÷ Sales Revenue x 100

Question 8

What Do you Have to find out first before you find the gross profit margin?

Answer 8

• You have to find out the gross profit before working the gross profit margin.

Question 9

Name 2 Ways to improve the gross profit margin?

Answer 9

• 1) Increase sales Revenue.
• 2) Lower cost of sales.

Question 10

Name 3 Things Businesses would need to do if the increase sales revenue?

Answer 10

• 1) Lowering the selling price may increase demand - so much that the business Experiences an increase in revenue despite fall in price.
• 2) Increasing the price may generate more revenue - If customers are prepared to pay a higher price for the products.
• 3) Increase Awareness of the product - This may increase sales revenue and impact Favourably on the gross profit margin.

Question 11

Name 1 Thing a business would need to do to lower the cost of sales?

Answer 11

• 1) Find a Cheaper Supplier - Businesses can try and cut down on the price paid to suppliers through negotiating existing suppliers.

Question 12

Write the Formula for Net profit Margin?

Answer 12

Net Profit ÷ Sales Revenue x 100

Question 13

Name 4 Ways a Business could gain Lower Expenses?

Answer 13

• 1) Delayer The organisational structure.
• 2) Review salary structure or bonuses.
• 3) Freeze recruitment.
• 4) Move to a cheaper location.

Question 14

Which ration is and explain why?

Answer 14

• The net profit margin is a better indication of businesses Financial. - This is because performance as the ratio takes into the account all the other operating expenses/interest.

Question 15

Name 4 Ways to Access finical Performance by comparing actual profit or rations?

Answer 15

• 1) Targets.
• 2) Previous Years Figures.
• 3) Competitors Performance .
• 4) Stakeholder objectives.

Question 16

Write a Definition of Annual Rate of Return (ARR)?

Answer 16

• Average annual rate of return is the average annual amount of income generated over the life of an investment.

Question 17

Name 3 Types of Business Investment?

Answer 17

• 1) Lands And Buildings - This Is when the Business first starts up.
• 2) Machinery - Business Need to invest in machines to increase production.
• 3) Vehicles - Modern and Reliable Transport can reduce costs.

Question 18

Write Down the Equation of Average Annual rate of Return?

Answer 18

Average annual Profit ÷ Cost Of investment x 100

Question 19

Write Down the Equation of Average Annual Profit?

Answer 19

Total Profit ÷ Number Of Years

Question 20

Name 3 Uses Of Quantitative Data?

Answer 20

• 1) Set Business Aims and Objectives.
• 2) Monitor The Performance of the Business.
• 3) Make Business Decision e.g. Sales Targets.

Question 21

Name 3 Things That Graphs and Charts Represent?

Answer 21

• 1) Represents Proportions.
• 2) Measure the Performance of a Business.
• 3) Show trends over time and make forcasts.

Question 22

Write 3 Types of Data that business use to make decisions?

Answer 22

• 1) Marketing Data.
• 2) Financial Data.
• 3) Market Data.

Question 23

Name a Example Of marketing data Financial Data, And Market Data?

Answer 23

• A example of marketing Data is Customers Opinions.
• A example of Financial Data is Tax rates.
• A example of market data is Size of market.

Question 24

Name 4 limitations of Financial Data?

Answer 24

• 1) It is Historical - Business Will make Decisions about the future on past Performance.
• 2) The Reasons Behind these Numbers - Sales revenue has fallen.
• 3) Statistics can be Manipulated - Facts can be expressed in different ways.
• 4) Business performance is not solely judged - Other qualitive factors that need to be considered.