Profitability Flashcards
1
Q
What is profit
A
Profit is an absolute measure of the amount of money a business makes after accounting for all expenses, profit = total revenue - total expenses
2
Q
What is meant by profitability and what does it measure
A
Profitability is the size of profit relative to the size of business. Measures how efficient the business is in using its resources to produce profit. Profitability is a relative measure of the success or failure of a business
3
Q
Is it possible to generate profit and not be profitable
A
Yes
4
Q
Gross profit margin calculation
A
Gross profit / revenue x 100
5
Q
Net profit margin calculation
A
Net profit / revenue x 100
