Profit (2.3.1)

Question 1

What is profit?

Answer 1

The money left over after all costs have been accounted for. There are several different types of profit

Question 2

What are the different types of Profit?

Answer 2

-Gross Profit
-Operating Profit
-Net Profit

Question 3

What’s the equation for Gross Profit?

Answer 3

Revenue-Cost of goods sold

Question 4

What’s the equation for Operating Profit?

Answer 4

Revenue-Operating costs

Question 5

What’s the equation for Net Profit (Profit for the year)

Answer 5

Operating Profit- Tax and Dividends

Question 6

What are the Cost of Goods Sold?

Answer 6

The direct cost of producing a finished product

Question 7

What are example of the Cost of Goods Sold?

Answer 7

-Raw Materials
-Production Worker Wages

Question 8

What are the Operating Expenses?

Answer 8

The Indirect cost of producing a finished product

Question 9

What are the examples of Operating Expenses?

Answer 9

-Rent
-Advertising
-Office Worker Salaries
-Packaging

Question 10

What is a Profit Margin?

Answer 10

Is the amount by which the sales revenue exceeds the costs. They can be calculated for each type of profit

Question 11

What’s the equation for Gross Profit Margin?

Answer 11

(Gross Profit/ Revenue)x100

Question 12

What’s the equation for Operating Profit Margin?

Answer 12

(Operating Profit/Revenue)x100

Question 13

What’s the equation for Net Profit Margin?

Answer 13

(Net Profit/Revenue)x100

Question 14

What are the three ways you can improve Profit?

Answer 14

-Increase Revenue
-Decreasing Cost of Goods Sold
-Decreasing Operating Costs

Question 15

How can you Increase revenue to improve Profit?

Answer 15

-Pricing Strategies
-Branding
-Marketing
-Extension Strategies
-New Products/Features

Question 16

How can you decrease cost of goods sold to improve Profit?

Answer 16

-Improve Productivity
-Lower production wages
-Production technology
-Cheaper Raw materials
-Off-Sharing

Question 17

How can you decrease operating costs to improve Profit?

Answer 17

-Less salaries for workers
-Less marketing
-Cheaper Rent
-Outsourcing
-Work from home

Question 18

How can a business obtain higher profit?

Answer 18

-Increase in new machinery
-Increase Advertising
-Improve Branding
-Expand to new areas
-Improve R + D
-Increase Capacity
-Improve skill of workers
-Increase prices
-Reduce expenses

Question 19

What is the statement of Comprehensive Income (Profit + Loss Account)?

Answer 19

It’s an end of year financial statement that shows all of a businesses income and expenses over the previous twelve months. Each type of profit is calculated within the statement and the previous year’s figures are also shown for comparison purposes

Question 20

What is the difference between Profit and Cash?

Answer 20

Profit is simply the difference between revenue generated and business costs whereas cash is measures by taking into account the full range of money flowing in and out of a business