What is the name for the income a business receives from its sales, calculated as price multiplied by quantity sold?
Revenue
What is meant by gross profit?
The profit made after deducting the cost of sales from sales revenue
Which term describes what is left of a business's income after every cost, expense and interest payment has been deducted?
Net profit
What is meant by the gross profit margin?
Gross profit expressed as a percentage of sales revenue
Which term is a measure of profitability that shows how much of each pound of sales is left as profit once every cost and interest payment has been deducted?
Net profit margin
What is meant by the average rate of return?
The average annual profit of a project as a percentage of its cost
Which calculation works out a business's gross profit?
Sales revenue minus cost of sales
A business sells 2,000 units at £20 each. Its cost of sales is £24,000. What is its gross profit?
£16,000
A business has a gross profit of £60,000. Its operating expenses are £22,000 and it pays interest of £3,000. What is its net profit?
£35,000
A business has sales revenue of £250,000 and a gross profit of £100,000. What is its gross profit margin?
40 per cent
A business has a net profit of £45,000 and sales revenue of £300,000. What is its net profit margin?
15 per cent
A project costs £500,000 and is expected to make a total profit of £300,000 over five years. What is its average rate of return?
12 per cent
A business has a net profit margin of 4 per cent, while the average for its industry is 15 per cent. What does this suggest?
It is less efficient at turning sales into profit
A firm requires a return of at least 20 per cent on a new project. Project A has an average rate of return of 25 per cent and Project B has 12 per cent. Which project should the firm choose?
Project A, as it beats the required return
What is meant by the cost of sales?
The direct cost of the goods that a business has sold
Two rivals in the same industry have gross profit margins of 42 per cent and 26 per cent. What does the higher margin suggest about the first business?
It keeps more of each pound of sales after paying for its goods
A business's gross profit margin stays at 40 per cent, but its net profit margin falls from 9 per cent to 5 per cent. What is the most likely reason?
Its operating expenses and interest have risen
A business works out that a new machine will give an average rate of return of 18 per cent. Why should this figure be treated with caution?
It is only a forecast of the profit the project may make
A business has sales revenue of £400,000 and a net profit margin of 8 per cent. What is its net profit?
£32,000
Which term describes information that is based on people's opinions, feelings and experiences rather than numbers?
Qualitative data
Which term describes a business's revenue minus the cost of sales, shown as a percentage of revenue?
Gross profit margin
What is the name for the proportion of total sales in an industry that is held by one business?
Market share
What is meant by average rate of return?
The average annual profit from an investment shown as a percentage of the amount invested
What is meant by a pie chart?
A chart that shows how a total amount is divided into its parts
What is meant by a forecast?
An estimate of future sales, costs or profits based on past data
Which measure shows a firm's profit after all its costs have been deducted from revenue, shown as a percentage?
Net profit margin
Shares in a public limited company have risen in price on the stock exchange. What does this most likely indicate?
Investors expect the business to perform well
What does a high click through rate show about an online advert?
A high share of viewers clicked on it
A firm's sales are £3m in a market worth £12m in total. What is the firm's market share?
25%
A cinema chain looks at the average income of households near each of its sites. What is this data most useful for?
Deciding who to target and what to charge
A business uses financial data from four years ago to judge its current performance. What is the main problem with this?
The market has moved on, so the figures are out of date
A firm's sales revenue is rising, but its net profit margin is falling. What does this show about judging business performance?
Some parts of performance can improve while others get worse
A business wants to show what share of its total sales each of its four product ranges makes up. Which chart is most suitable?
A pie chart
A cycle hire business is deciding whether to open a branch in a new town. Which piece of market data would best show whether demand for cycling there is growing?
Market growth figures for cycle hire in the town
An umbrella seller's sales figures are seasonally adjusted. What has happened to the figures?
The regular yearly swings have been evened out
A florist advertises on a website and in a local magazine. Why does it compare the conversion rate of the two adverts?
To see which advert leads to more actual sales
Why can anyone look up the profit and loss figures of a large public limited company, but not those of a local sole trader?
Limited companies file their accounts with Companies House, and these are public
Why might a large fast food chain want to find out how much its main rivals spend on advertising?
To judge how much it may need to spend to keep its market share
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