Flash Card Quiz: profits & profitability

What is Gross Profit Margin?

• Gross Profit Margin is the percentage of revenue that exceeds the cost of goods sold.

• Gross Profit Margin is the total revenue after deducting all expenses.

• Gross Profit Margin is the net income divided by total assets.

• Gross Profit Margin is the amount of cash generated from operating activities.

Define Operating Profit.

• Operating Profit is the profit earned from a firm's normal core business operations, excluding deductions of interest and tax.

• Operating Profit is the total revenue after deducting only the cost of goods sold.

• Operating Profit is the profit after all expenses, including interest and tax, have been deducted.

• Operating Profit is the profit earned from non-operating activities such as investments.

Revenue = £100,000

Cost of sales = £50,000

Other expenses = £25,000

What is the gross profit?

• £25,000

• £50,000

• £100,000

• £75,000

Corporation Tax is paid by?

• partnerships

• companies

• sole traders

• individuals

Raw materials: £100

Rent: £200

Interest on a bank loan £50

Cost of packaging £30

Total operational expenses: ?

• £380

• £250

• £130

• £280

How can a business improve the Operating Profit Margin?

• Finding a more expensive supplier with better quality
• Reducing the wage bill
• Raising electricity usage
• None of the above

A fall in the gross profit margin might suggest ____

• that suppliers are charging higher prices

• that suppliers are charging lower prices

• that the business is charging customers higher prices

• that operating (other) expenses have increased

What is the formula for profit after tax?

• Net profit before tax + corporation tax

• Net profit before tax - corporation tax

• Net profit after tax - corporation tax

• Net profit after tax + corporation tax

What is the gross profit margin formula?

• Net profit / Total revenue x 100

• Gross profit / Total revenue x 100

• Total revenue / Gross profit x 100

• Cost of sales / Total revenue x 100

Revenue = £100,000

Cost of sales = £50,000

Other expenses = £40,000

What is the gross profit margin?

• 35%

• 50%

• 10%

• 85%