Theme 2: Section 8 Managing Finance Flashcards
Percentage Increase/Decrease
Profits from year to year, compare if doing well or not.
Percentage change in Profit
Current year profit - Previous year Profit/Previous year profit x 100
Gross Profit and Formula
Amount left over when the Cost of Sales (cost of product) subtracted from Total Revenue.
Total Revenue - Cost of sales
Operating profit and Formula
Cost of Sales and operating expenses.
Gross Profit - Other Operating expenses.
Net Profit (Profit for the year) and Formula
Interest the business has to pay for borrowing money.
Operating Profit - Interest.
Comprehensive Income statement ( Profit/Loss account)
Shows money coming in (Revenue) and out (Expenses).
Previous years, useful trends overtime.
Profit Margins
Measure relationship between profit made and revenue, percentage of selling price of product is profit.
Gross Profit Margin and Formula
Percentage of Revenue.
Gross Profit/Revenue x 100.
Operating Profit Margin and formula
Costs of regular trading.
Operating Profit/Revenue x 100.
Net Profit Margin (Profit of the year) and Formula
Measures Profit for the year as percentage of Revenue.
Profit for the year/Revenue x 100.
Increasing Profit Margins
Reducing Cost of Sales, cheaper supplier. May lead to lower quality, reduce sales volume and Revenue.
Interpret Profit Margins
Compare with previous years
Profit
money left from Revenue once costs paid.
Cash
Constantly flowing in and out, bills.
Financial Position Statement/ Balance Sheet
Value of Assets (own), liabilities (owe), Capital (retained profit).