Decision trees

Decision trees

Multiple Choice

The formula for gross profit is?

• Revenue - overheads

• Revenue - cost of sales

• Revenue - (overheads + cost of sales)

Multiple Choice

Operating profit comes after gross profit has been worked out and involves taking away any additional overheads, not associated with the cost of sales.

• TRUE

• FALSE

Multiple Choice

What is the operating profit margin based on the following data?

Revenue                 £126,000 
Operating profit     £27,000

• 467%

• 19.52%

• 21.43%

• Other

Multiple Choice

What is the operating profit margin based on the following data?

Revenue                 £126,000 
Cost of sales          £45,000 
Other expenses     £70,000

• 8.73%

• 10.52%

• 35.71%

• Other

Scenario - Shall I spend an extra £5million on advertising to strengthen my brand image and generate more revenue

• I'm kind of 80% certain I can generate an additional £15million worth of sales.

• But the other 20% of me thinks it might not reach the right audience so I might lose £4.5million due to over exposure.

Decision tree example

Multiple Choice

The net gain for turning part of the farm into Wilderness campsite is:

• £906,000

• £901,000

• £896,000

• Other

Multiple Choice

The net gain for keeping the farm and investing money in it:

• £56,000

• £53,000

• £50,000

• Other