this is the total revenue a business recieves in a given financial period- e.g from selling products.
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cost of sales (cost of goods sold)
this is how much it costs to make or produce a product.
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gross profit and formula
the profit a business makes on selling its products. Formula= turnover - cost of sales
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expenses (also known as overheads)
these are costs that an business must pay in order for it to run. -include all copsts not associated with making the product like wages of staff and advertising.
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net profit anf formula
is the money left when all expenses are deducted from the gross profit. formula= gross profit - expenses
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gross profit impact- positive
when gross profit is positive its revenue is greater than coast of sales.
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gross profit impact- negative
when its negative action should be take to: increases sales revenue and reduce the cost of sales (e.g using raw materials)
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net profit impact- positive
when net profit is positive, fross profit is also positive and expenditure is within budget levels.
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net profit impact- negative
when its negative this could be because gross profit is too low or expenses are too high. the action should be to reducer expenses and increase gross profit.
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Other cards in this set
Card 2
Front
this is how much it costs to make or produce a product.
Back
cost of sales (cost of goods sold)
Card 3
Front
the profit a business makes on selling its products. Formula= turnover - cost of sales
Back
Card 4
Front
these are costs that an business must pay in order for it to run. -include all copsts not associated with making the product like wages of staff and advertising.
Back
Card 5
Front
is the money left when all expenses are deducted from the gross profit. formula= gross profit - expenses
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