Profit Flashcards
State different types of profit.
- Gross profit.
- Operating profit.
- Profit of the year.
Whats the formula for profit?
Selling price - cost price.
State key words linked with profit.
- Revenue.
- Cost of sales.
- Operating costs.
- Taxes/dividends.
Define gross profit.
The profit a business makes after subtracting all the costs.
Define operating profit.
The total income a company generates from sales after paying off all operating expenses.
Define profit for the year.
The profit made after all other operating expenses have been deducted from the gross profit.
State ways to improve profit.
- Reducing amount of stock bought at a time (especially in food industry)
- Find cheaper supplier.
- Increase selling price.
Whats the difference between profit and cash flow?
Cash flow is the money that flows in and out of your business whereas profit is whatever remains from your revenue after costs are deducted.
What is sales forecasting?
Trying to predict how much a business will sell in the future.
Why is a sales forecast good?
Without it business would be left to react to change and would fail to deliver effective products/services when consumers want them.
What are the purposes of sales forecasting?
- HR plan.
- Marketing budgets.
- Profit forecasts and budgets.
- Production planning.
What is a HR plan?
To ensure that, in the medium to long term, the right number of staff with the right skills are employed, and in the short term, the right number of staff are actually at work.
Purposes of profit forecasts and budgets?
When planning how much the firm is expecting to make in revenue and profit, it helps to shape expectations of spending.
Purposes of production planning?
To ensure that enough products are made and before that, enough raw materials are bought.
Purposes of marketing budgets?
In order to decide how much to allocate to marketing.
