different types of profit Flashcards
what is profit formula?
total revenue-total costs
what is gross profit?
the profit straight after sales, not taking any other costs into account (only sales)
gross profit formula?
revenue-cost of sales
what is operating profit?
profit after taking into account other expenses like rent, salaries etc
operating profit formula
gross profit- other operating expenses
what is net profit?
profit after gross, operating profit and taxes
net profit formula
total revenue-total expenses
what is gross profit margin formula
gross profit/revenue x 100
operating profit margin formula
operating profit/revenue x 100
what is adverse profit variance
when actual profit is smaller than budgeted
what is favourable profit variance?
when actual profit is bigger than budgeted
what is a statement of comprehensive income?
financial document showing a company’s income and expenditure over a year
ways to improve profitability
- increase prices
- lowering costs (cheaper supplier, sell/lease current assets)
