Return or reward for taking risks and making investments done annually or quarterly.
total sales -total costs
1 of 10
Relative terms of profit
-Profit earned as a proportion of sales
-to a percentile
2 of 10
How can profit be increased
Increase quantity sold
Increase selling price
Reduce variable cost per unit
Increase output
Reduce fixed cost
3 of 10
Impact of increasing selling price
price and income elasticity
4 of 10
Impacts of reducing the variable costs per unit
suppliers,deteriorating quality of goods if suppliers change
5 of 10
Increase outputs
capacity utilisation -optimising machinery to make the most products
Competitors are likely to respond
Acid test ratio -what if demands not there
6 of 10
Reduce fixed costs
political and economical implications and a short term measure
7 of 10
Cost minimisation
profit and revenue maximisation.cost minimisation. cash flow objectives, net cash flow must be positive
8 of 10
Bankers mantra
Revenue is vanity-inflate the importance
Profit is sanity-sensible things to do
Cash is king -cash sustains the day-to-day running of the business-livelihood
9 of 10
Difference between cash flow and profit
Profit shows the long term value of a financial decision;cash flow shows the short term impact of that decision on the firms bank balance.
10 of 10
Other cards in this set
Card 2
Front
Relative terms of profit
Back
-Profit earned as a proportion of sales
-to a percentile
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