managing finance Flashcards
profit formula
total revenue - total costs
gross profit formula
revenue - cost of sales
operating profit formula
gross profit - overheads
net profit formula
operating profit - interest
net profit is
what is left after all costs have been taken off revenue `
gross profit margin is
assesses the proportion of money left over from revenue after taking into account costs of goods sold
gross profit margin formula
gross profit / revenue x 100
operating profit margin is
a % of sales revenue
the higher to more control over costs
operating profit margin formula
operating profit / revenue x 100
net profit margin is
profit after tax, as a % of sales revenue
net profit margin formula
net profit / revenue x 100
3 ways to improve profit
change price
decrease costs
increase sales volumes (promotions)
4 difficulties of profit
competition
market conditions
pestle
interest rates
liquidity is
a measure of the extent to which a business has cash to meet immediate and short term obligations
2 liquidity ratios
current ratio
acid test ratio
