Profit Flashcards
Profit
The difference between total revenues and costs
Uses of profit
Re invest
Reward for business owners
Measure performance
Improving profit
Need to increase profit margins on goods
- increase quantity sold
- increase selling price
- reduced fixed costs
SOCI
A financial document that summarises a business historic trading activity and expenses to show whether it has made a profit or loss over a time period
Gross profit
Revenue - cost of sales
Revenue
Price x output
Fixed overheads
Indirect costs such as rent
Profit before tax
Operating profit - financing costs
Profit for the year
AKA net profit
Profit before tax - tax
Profitability ratios
Measure performance, a firms efficiency at achieving profit
Gross profit margin
Gross profit / sales revenue x 100
Operating profit
Operating profit / sales revenue x 100
Profit for the year
Net profit / sales revenue x 100
Cash flow
The difference between total cash inflow and total cash outflows over a period
Credit
Money you don’t receive straight away
