3.5.1 Measuring and Increasing Profit

What is the primary goal of most businesses?

• To increase their expenses

• To make a profit

• To reduce their workforce

• To decrease their prices

How do businesses measure their progress in terms of profit?

• By comparing their profits from the current period to the profits from previous periods

• By comparing their expenses from the current period to the expenses from previous periods

• By comparing their sales from the current period to the sales from previous periods

• By comparing their workforce size from the current period to the workforce size from previous periods

What should a business do if its profits are decreasing?

• Ignore the issue

• Investigate why it is happening and take action to fix it

• Increase their workforce

• Decrease their prices

What is the formula for measuring the percentage change in profit?

• (Current Year's Profit - Previous Year's Profit) / Current Year's Profit * 100

• (Current Year's Profit - Previous Year's Profit) / Previous Year's Profit * 100

• (Previous Year's Profit - Current Year's Profit) / Previous Year's Profit * 100

• (Previous Year's Profit - Current Year's Profit) / Current Year's Profit * 100

Which method can businesses use to improve their profits by increasing demand?

• Reducing their prices

• Increasing their prices

• Using advertising

• Reducing the quality of their product

What is the downside of increasing prices to improve profits?

• It can lead to reduced sales

• It can lead to increased production costs

• It can lead to higher taxes

• It can lead to lower quality products

What is gross profit?

• The amount left over when the cost of sales is subtracted from sales revenue

• The amount left over when operating expenses are subtracted from sales revenue

• The amount left over when taxes are subtracted from sales revenue

• The amount left over when interest payments are subtracted from sales revenue

What does operating profit take into account?

• All revenues and costs from regular trading

• Only revenues from one-off events

• Only costs from one-off events

• Only revenues from regular trading

What is the formula for calculating operating profit?

• Sales Revenue - Cost of Sales

• Sales Revenue - Cost of Sales - Operating Expenses

• Sales Revenue - Operating Expenses

• Sales Revenue - Cost of Sales - Taxes

What does the profit for the year take into consideration?

• Only operating profit

• Only other profit

• Only net finance costs

• Operating profit, other profit, net finance costs, and tax