PROFITS AND PROFITABILITY Flashcards
1
Q
What is profit
A
Profit = The amount of money made by a company when its total revenue exceeds its total costs
2
Q
What is the formula of working out profit
A
Total revenue (TR) - Total costs (TC)
3
Q
What is profitability
A
Profitability = A measure of how effectively a business turns sales revenue into profit
4
Q
What is gross profit
A
Total revenue - costs of production (variable costs)
5
Q
Profits from operations
A
Gross profit - expenses (fixed costs)
6
Q
Profits for the year
A
Operating profit - taxes / interest
7
Q
What is operating profit margin
A
A measure of a firms profitability by looking at the relationship between net profit and sales revenue
8
Q
What is the formula to workout operating profit margin
A
Operating profit divided by sales revenue multiplied by 100
9
Q
A
