34. Profit Flashcards
Gross profit is the difference…
between revenue and costs of sales
Operating profit is the difference…
between gross profit and operating expenses
Profit for the year (net profit) is the difference…
Between operating profit and finance costs (and excepcional costs)
Ways to increase profit:
- Adjust the marketing strategy
- Find new markets
- Diversify
- Mergers and takeovers
- Disposal of non-profitable activities
Gross profit margin =
gross profit / revenue x 100
Operating profit margin =
Operating profit/ revenue x 100
Profit for the year margin =
Net profit before tax / revenue x 100
Ways to improve profitability:
- Raising prices
- Lowering costs:
· Buying cheaper resources
· Using existing resources more efficiently
amortisation
the writing off of an intangible asset
costs of sales
the direct costs of a business
exceptional costs
a one-off cost, such as a large bad debt
gross profit margin
gross profit expressed as a percentage of revenue
operating profit margin
operating profit expressed as a percentage of revenue
profit for the year margin
net profit before tax, expressed as a percentage of revenue
revenue
the total income of a business resulting from sales of goods or services
