Profit Flashcards
(16 cards)
Profit
The difference between total revenues and costs
Uses of profit
Re invest
Reward for business owners
Measure performance
Improving profit
Need to increase profit margins on goods
- increase quantity sold
- increase selling price
- reduced fixed costs
SOCI
A financial document that summarises a business historic trading activity and expenses to show whether it has made a profit or loss over a time period
Gross profit
Revenue - cost of sales
Revenue
Price x output
Fixed overheads
Indirect costs such as rent
Profit before tax
Operating profit - financing costs
Profit for the year
AKA net profit
Profit before tax - tax
Profitability ratios
Measure performance, a firms efficiency at achieving profit
Gross profit margin
Gross profit / sales revenue x 100
Operating profit
Operating profit / sales revenue x 100
Profit for the year
Net profit / sales revenue x 100
Cash flow
The difference between total cash inflow and total cash outflows over a period
Credit
Money you don’t receive straight away
Debtor
Someone who owes you money
