Analysing Profitability (AQA A-Level Business): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
Why do profit figures alone have limited value for assessing business performance?
Why do profit figures alone have limited value for assessing business performance?
They don't allow fair comparisons
What formula structure do all three profit margins follow?
What formula structure do all three profit margins follow?
(profit ÷ sales revenue) × 100
What does gross profit margin show?
What does gross profit margin show?
% of revenue left after direct costs
Which profit margin is often seen as the most important profitability measure?
Which profit margin is often seen as the most important profitability measure?
Operating profit margin
What does profit for the year margin indicate?
What does profit for the year margin indicate?
Final profit % after interest & tax
If sales revenue is £500,000 and operating profit is £75,000, what is the operating profit margin?
If sales revenue is £500,000 and operating profit is £75,000, what is the operating profit margin?
15%
If a business has an operating profit margin of 20%, what does this mean?
If a business has an operating profit margin of 20%, what does this mean?
For every £1 of sales, 20p is profit
What could a falling gross profit margin indicate?
What could a falling gross profit margin indicate?
Rising direct costs of production
What could a falling operating profit margin suggest?
What could a falling operating profit margin suggest?
Rising indirect costs like rent
Why are profit margins useful when comparing different businesses?
Why are profit margins useful when comparing different businesses?
They enable fair comparison of sizes