Calculated by subtracting expenses from Gross profit
Net or Operating Profit
100
What is the profit formula
Total Sales(Revenue) - Total Costs
100
What is the formula for breakeven
FC/ SP- VC
100
List 2 cash inflows?
wages, pocket money, grant
100
What is the formula for margin of safety
Actual output - breakeven output
200
Name 2 types of organisations that are legally required to produce a trading, profit and loss account?
PLC
Ltd Private Limited Company
200
This figure is calculated by subtracting cost of sales from sales revenue
Gross profit
200
What is the formula for Total Revenue
SP x output (quantity)
200
List 2 outflows?
travel expenses, electricity, entertainment
200
If actual out is 10000 and the break even point is 4500. What is the margin of safety?
5500
300
Give one reason why business create a Profit and Loss statement?
Analyse the performance of the business
300
Give 2 examples of cost of sales
raw material
cost of running machines
labour
300
Give 1 reason why breakeven analysis is useful?
To see how many units a company most produce in order to breakeven.
300
What is the formula for net cashflow?
Total inflows - total outflows
300
Define margin of safety?
Margin of safety is how much output can fall before a business reaches its breakeven point.
400
If gross profit is 3525
and expenses include
rent - 2000
salaries - 500
electricity - 200
What is the net (operating) profit?
825
400
Evaluate 2 possible ways to increase sales revenue?
increase prices - may lead to a fall in demand
decrease prices should lead to an increase in demand but product may be seen as poor quality
400
List one disadvantage of breakeven?
Not all goods produced are sold
400
Explain 1 thing a business could do to decrease cash outflows? What are the consequences of this action?
Change supplier, however this may lead to inferior quality products
400
margin of safety is measured in ______
units
500
If sales were 500,000
and opening stock was 50,000
and purchases was 250,000
and closing stock was 100,000
Calculate COGS and Gross profit
COGS = 200,000
Gross Profit = 300,000
500
1.Name 2 stakeholders that are interested in seeing the trading, Profit and loss account
2. Why are they interested?
Government - taxes
shareholders - dividends
500
List one advantage of breakeven analysis?
quick, easy
500
Explain 1 thing a business cold do to improve cash inflows? What are the consequences of this action?
advertising campaign to boost sales however this will also cost money
500
At a selling price of $20, variable costs of $3 per unit, Louise actually sold 3500. If the breakeven point was 1250 units what was the margin of safety?