F3 Measuring profitability

Question 1

what is gross profit margin?

Answer 1

a measure of a business’ profitability by looking at the relationship between gross profit and sales revenue
measures whether a business is managing cost of sales effectively.

Question 2

what is mark-up?

Answer 2

a measure of a business’ profitability by looking at the relationship between gross profit and cost of sales. measures whether a business is managing cost of sales effectively.

Question 3

what is profit margins?

Answer 3

a measure of a business’ profitability by looking at the relationship between profit and sales revenue.
may indicate if a business is managing its expenses effectively.

Question 4

what is return of capital employed (ROCE)?

Answer 4

measures how effectively a business is using capital employed to generate profits.