calculation of profit Flashcards
1
Q
define profit
A
it is the money left in the business after all expenses have been paid
total revenue - total costs
2
Q
improving profitability by increasing revenue…
A
- Increase prices (dependent on PED)
- Reduce process
- More marketing; cost relative to benefits
- Add value to the product
3
Q
improving profitability by reducing costs…
A
- Reduce production costs - Improve efficiency
- Use capital more fully
- Eliminate unprofitable processes
- Reduce variable costs; better deals
with suppliers - Lower overheads
4
Q
what is the statement of comprehensive income?
A
provides a summary of profit or loss made during the year
5
Q
what is gross profit? formula
A
revenue - costs of sales
6
Q
what is operating profit? formula
A
gross profit - expenses
7
Q
what is net profit? formula
A
profit - (interest/tax)
8
Q
what is gross profit?
A
cost of sales are the raw materials required to make the product
9
Q
what is operating profit?
A
- accounts for other expenditures in the business e.g. rent, fixed costs
10
Q
what is net profit?
A
- final profit for the business
- adjusts to interest payments business has to make
