Theme 1 - Profit and loss

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  • Created by: becky.65
  • Created on: 08-05-17 19:54
What are the three ways profit can be measured?
Gross profit, operating profit and profit for the year
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What is gross profit?
Turnover - Variable Costs
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What is operating profit?
Turnover - (Fixed + Variable Costs ) OR Gross Profit - Fixed Costs
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What is profit for the year (also known as net profit)?
Turnover - Total Costs - Taxes - Interest OR Operating Profit - Taxes and Interest
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What is a statement of comprehensive income?
It shows a company's net profit or loss, over a given time period. It details all the revenues and costs of the business
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What does a statement of comprehensive income show?
How the retained profit was calculated from revenue so the shareholders can see how much there is to invest. It can also show the comparisons of the business from previous years to make decisions
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What is a profit margin?
It tells the business what percentage of its turnover is actually profit
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What is a gross profit margin?
It shows how efficiently the business is using its main inputs to the production process
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What is a profit margin an example of?
A financial ratio
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How do you work out profit margin?
Profit / Turnover x 100
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What will the profit margin depend on?
The amount of value added
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How do profit of the year margins vary?
According to interest rates, tax rates and inflation
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When might an increase of profits be a worry?
If it is not as large as competitors increase
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How can businesses increase profit?
Adding value, improving reliability, repositioning the product, energetic market research, promotion, cutting costs and prices and increasing market share
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Other cards in this set

Card 2

Front

What is gross profit?

Back

Turnover - Variable Costs

Card 3

Front

What is operating profit?

Back

Preview of the front of card 3

Card 4

Front

What is profit for the year (also known as net profit)?

Back

Preview of the front of card 4

Card 5

Front

What is a statement of comprehensive income?

Back

Preview of the front of card 5
View more cards

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