profit and loss Flashcards
what are cost of sales?
costs involved in the direct production of the product
what is the formula for total cost of sales/revenue ?
Total cost of sales/revenue = (opening stock + cost of sales) – closing stock
what is an example of cost of sales?
making a cake, flour and sugar are the cost of sales, however the transportation of the raw materials is an expense.
what is gross profit?
how efficient the business is at making and selling its product.
what is the formula for gross profit?
Gross profit= sales of a business (revenue) - cost of sales
what is the formula for net profit?
Net profit= gross profit – total expenses
what is opening stock?
the amount and value of materials that a company has available for sale or use at the beginning of an accounting period, that has rolled over.
how can you improve profit and loss?
*reduce expenses.
*Increase sales.
*Reduce amount of stock
-Change suppliers.
*Expand market.
*Decrease/ increase prices
what is the formula for gross profit margin?
Gross profit margin = Gross profit / sales revenue X 100
what is gross profit margin?
the percentage of sales income you have left after paying for the stuff you sold.
what is net profit margin?
is the percentage of total income you get to keep after all expenses and taxes are paid.
what is net profit margin formula
Net profit margin= net profit/ sales revenue X 100
is net profit higher or lower than gross profit?
lower
