Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > 2.3 > Flashcards

2.3 Flashcards

1
Q

Profit

A

Total revenue - Total costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Sales revenue

A

Money coming in from sales

Quantity sold X price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Cost of sales

A

Costs directly linked to production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Gross profit

A

Sales revenue - cost of sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Operating profit

A

Gross profit - expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Net profit

A

Operating profit - interest and taxation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Exceptional items

A

Any unusually large or infrequent transaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Layout of an income statement

A

Sales revenue

Cost of sales

Gross profit

Other operating expenses

Operating profit

Interest & taxes

Exceptional items

Net profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Profitability

A

Measures the financial performance by comparing profit with a second variable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Gross profit margin calculation

A

Gross profit / Sales revenue X 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Gross pross margin

A

A measure of a firms profit by looking at the relationship between gross profit and sales revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What does it mean if gross profit margin is low or falling

A
  • The firm is not managing cost of sales effectively
  • Sales are declining
  • Costs are increasing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Operating profit

A

A measure of a firms profit by looking at the relationship between operating profit and sales revenue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does it mean if the operating profit margin is low or falling

A
  • The firm is not managing expenses effectively
  • Sales are declining
  • Overheads are increasing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Operating profit margin calculation

A

Operating profit / Sales revenue X 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Net profit margin

A

A measure of a firms profit by looking at the relationship between net profit and sales revenue

17
Q

What does it mean if net profit margin is low or falling

A
  • Gross or operating profit are falling
  • Interest rates have changed
  • Taxes have changed.
18
Q

Net profit margin calculation

A

Net profit / sales revenue X 100

19
Q

How to increase profit and profitability

A
  • Sell the same quantity at a higher price
  • Sell more at the current price
  • Sell the same amount at the same price but lower total costs.
20
Q

Cash

A

The physical existence of money within the business

21
Q

Cash flow

A

The timings of cash flowing in and out of the business

22
Q

Balance sheet

A

A financial document that summarises the net worth of a business.
Balances net assets with total equity

23
Q

Net worth

A

The total worth of a business including assets.

24
Q

Non - current assets

A

Assets likely to be kept by a business for more than one year e.g. machinery

25
Q

Current assets

A

Likely to be turned into cash within a year e.g. stock

26
Q

Non - current liabilities

A

Debt that a business has more than one year to repay e.g. bank loans

27
Q

Current liabilities

A

Debts that the business have to pay within one year e.g. bank overdrafts

28
Q

Net worth

A

Non-current assets + current assets + (current liabilities) + (Non-current liabilities)

29
Q

Total equity

A

Share capital + retained profit

30
Q

Liquidity

A

A measure of the firms short term survival (its ability to meet short-term debts and day to day expenses)

31
Q

Current ratio

A

Current assets : current liabilities

32
Q

Acid rest ratio

A

Liquid assets : Current liabilities

33
Q

Liquid assets

A

Receivables + cash and cash equivalents

34
Q

How businesses improve liquidity

A
  • Increase current assets (sell assets)

- Reduce current liability (credit)

35
Q

Working capital

A

Ability to meet day to day expenses.
Net current assets > current liabilities.
If not, a business cannot conduct day to day business and needs to increase cash.

36
Q

Working capital calculations

A

Current assets - Current liabilities

37
Q

Internal causes of business failure

A
  • Failing to understand the market
  • Poor planning
  • Poor decision making
  • Badly organised
  • Overtrading
  • Not viable in the first place
38
Q

External causes of business failure

A
  • Economic environment
  • Changing Social trends
  • Demographic changes
  • Political environment.

Business (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions