Profit (2.3.1) Flashcards
What’s the equation for Gross Profit?
Revenue-Cost of goods sold
What’s the equation for Operating Profit?
Revenue-Operating costs
What’s the equation for Net Profit (Profit for the year)
Operating Profit- Tax and Dividends
What are the Cost of Goods Sold?
The direct cost of producing a finished product
What are example of the Cost of Goods Sold?
-Raw Materials
-Production Worker Wages
What are the Operating Expenses?
The Indirect cost of producing a finished product
What are the examples of Operating Expenses?
-Rent
-Advertising
-Office Worker Salaries
-Packaging
What’s the equation for Gross Profit Margin?
(Gross Profit/ Revenue)x100
What’s the equation for Operating Profit Margin?
(Operating Profit/Revenue)x100
What’s the equation for Net Profit Margin?
(Net Profit/Revenue)x100
What are the three ways you can improve Profit?
-Increase Revenue
-Decreasing Cost of Goods Sold
-Decreasing Operating Costs
How can you Increase revenue to improve Profit?
-Pricing Strategies
-Branding
-Marketing
-Extension Strategies
-New Products/Features
How can you decrease cost of goods sold to improve Profit?
-Improve Productivity
-Lower production wages
-Production technology
-Cheaper Raw materials
-Off-Sharing
How can you decrease operating costs to improve Profit?
-Less salaries for workers
-Less marketing
-Cheaper Rent
-Outsourcing
-Work from home
How can a business obtain higher profit?
-Increase in new machinery
-Increase Advertising
-Improve Branding
-Expand to new areas
-Improve R + D
-Increase Capacity
-Improve skill of workers
