Business - Unit 5: Finance - 5.3
- Created by: TabithaP2019
- Created on: 23-10-19 18:56
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- 5.3 - Revenue, costs, profit and loss
- Revenue
- Money coming into a business from sales of products/ services
- Revenue = price x quantity sold
- R = P Q
- Total costs
- Payments that a business makes in order to make products and services
- Total costs = fixed costs + variable costs
- TC = FC + VC
- Fixed costs
- Costs that do not change depending on output
- e.g. rent, salary, interest repayments
- Costs that do not change depending on output
- Variable costs
- Costs that change depending on output
- e.g. packaging /materials
- Variable costs = quantity sold x variable cost per unit
- Costs that change depending on output
- Gross profit
- Profit made because of revenue, not including overhead expenses
- Gross profit = revenue - cost of sales
- Net profit
- Profit made because of revenue, including overhead expenses
- Gross profit margin
- The % of revenue that is gross profit
- Gross profit margin = gross profit/ revenue x 100
- Net profit margin
- The % of revenue that is net profit
- Net profit margin = net profit/ sales revenue x 100
- ARR
- The amount of finance received on average over the lifetime of an investment
- ([total income - cost of investment] / no of years) / cost of investment x 100
- ARR
- The amount of finance received on average over the lifetime of an investment
- ([total income - cost of investment] / no of years) / cost of investment x 100
- ([total income - cost of investment] / no of years) / cost of investment x 100
- The amount of finance received on average over the lifetime of an investment
- ARR
- ([total income - cost of investment] / no of years) / cost of investment x 100
- The amount of finance received on average over the lifetime of an investment
- Revenue
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