Profit

Question 1

What is profit and what are the three types?

Answer 1

Reward or return for taking risks and making investments
Three types:
- gorss
-net
-operating

Question 2

What is ratio analysis?

Answer 2

Analysing relationships between financial data to access the performance of a business

Question 3

What is operating and net profit equation?

Answer 3

Gross profit- expenses and overheads= operating
operating profit- intrest= net

Question 4

What are ways to increase profit?

Answer 4

• increase sales
• reduce costs
  -outsource non essential functions

Question 5

What is the difference between profit and cash?

Answer 5

Profit is recorded straight away, cash is not recorded until its paid out
Business can trade many years without profit but not without cash

Question 6

What is operating profit margin, net profit margin and gross profit margin equation?

Answer 6

Operating- operating profit/ sales revenue x 100
Gross- gross profit/ sales revenue x 100
net- net profit/ sales rev x 100