Profit

Question 1

What is profit

Answer 1

The difference between revenue and all the costs involved

Question 2

What is gross profit margin

What is gross profit

Answer 2

Gross profit / sales revenue X 100

Gross profit = revenue -cost of sales

Question 3

What is the operating profit margin

What is operating profit

Answer 3

Operating profit /sales revenue X 100

Operating profit = gross profit - fixed overheads

Question 4

What is Net profit margin

How do you work out profit of the year

Answer 4

Profit of the year / sales revenue X100

Profit of the year =operating profit -tax and interest

Question 5

What is profitability

Answer 5

The ability of a business to generate profits from its resources

Question 6

What is a profit margin

Answer 6

Tells a business what percentage of turnover is actually profit

Question 7

What are ways to improve profitability

Answer 7

Raising the price - depends on PED
Increase number of units sold 
Fixed costs spread over a range of goods reducing average costs 
Reducing costs 
Increase efficiency 

Cutting back on waste
Producing more output with same input

Question 8

Difference between profit and cash

Answer 8

Cash is in the form of money or bank deposits or assets

Profit is the difference between total sales revenue and total production costs