what does an income statement/profit and loss account measure?
how good or badly a company has done in its financial history(usually over a 1 year period).
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what is revenue?
income from trade.
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what does COGS stand for?
cost of goods sold( how much it costs to buy raw materials to make a product)
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how to calculate gross profit?
revenue-COGS
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What are overheads?
essentially fixed costs.
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what are operating costs?
They are the cost of resources used by an organization just to maintain its existence.
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why do supermarkets have low profit margins?
because they bulk buy a lot of products and have a high level of competition.(they pile high and still sell quite cheap)
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many costs are deducted from the revenue. name at least 6...
variable costs(suppliers),fixed costs(employee wages, bills), interest(to banks),tax (government),dividends(owners, shareholders),remainder is profit that can be put back into the business.
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what does return on investment mean?
how much profit is made in relation to capital invested into the business
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how do you calculate return on investment?
operating profit x 100/ capital invested
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bob invests £100,000 on a new corner shop. in his first year his operating profit is £6,000. what is his return on investment after 1 year?
6%
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what is capital strutures?
how a business has raised its capital to purchase its assets.
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what is operating profit?
A profit from business operations.( before deduction of interest rates and taxes)
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what is the calculation for operating profit?
revenue- cost of oods sold,labour and other operating expenses
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what is the calculation for profit margin?
profitx100/revenue
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calculate the total cost if fixed costs are £7,500 and varible costs are £12 per unit and the current output is 500 units.
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