Measuring and increasing profit Flashcards
(10 cards)
What is the formula for percentage change in profit?
Change in profit / previous year’s profit x 100
What are different methods businesses use to increase profits?
Increase prices
Reduce costs of production
Advertising
What are problems with the methods used to increase profits?
Reduced sales
Potentially reduced quality
Advertising can be expensive
What is gross profit?
The difference between sales revenue and cost of sales.
What is the formula for gross profit?
Sales revenue - cost of sales
What is operating profit?
Profit made after subtracting all expenses except one-off events like interest and tax.
What is the formula for operating profit?
Gross Profit – Operating Expenses
What is profit for the year?
Profit made after subtracting all expenses.
What is the formula for profit for the year?
Operating Profit – Interest – Tax
What is the formula for profit margins?
Type of profit / Sales revenue x 100
