Profit margins and ARR (Edexcel GCSE Business): Quizzes
📚Quizzes
Practise the questions
12 questions from this quiz
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Practise the questions
12 questions from this quiz
What do profit margins show about a business?
What do profit margins show about a business?
How much profit is generated from sales
What is the formula for gross profit margin?
What is the formula for gross profit margin?
(Gross profit ÷ Sales revenue) × 100
If a business has a GPM of 40%, what does this mean per £1 of sales?
If a business has a GPM of 40%, what does this mean per £1 of sales?
40p becomes gross profit
What type of costs does gross profit margin specifically focus on?
What type of costs does gross profit margin specifically focus on?
Direct production costs only
What is GPM particularly useful for?
What is GPM particularly useful for?
Comparing profitability of products
What is the formula for net profit margin?
What is the formula for net profit margin?
(Net profit ÷ Sales revenue) × 100
Which expenses does net profit margin include?
Which expenses does net profit margin include?
Direct costs & operating expenses
If a business has an NPM of 8%, what happens to every £1 of sales?
If a business has an NPM of 8%, what happens to every £1 of sales?
8p becomes net profit
How do net profit margins generally compare to gross profit margins?
How do net profit margins generally compare to gross profit margins?
NPM is generally lower than GPM
What does average rate of return (ARR) help businesses evaluate?
What does average rate of return (ARR) help businesses evaluate?
Investment opportunities
What is the formula for average rate of return?
What is the formula for average rate of return?
(Avg annual profit ÷ Investment cost)×100
An investment of £600,000 makes total profit of £800,000 over 4 years. What is the ARR?
An investment of £600,000 makes total profit of £800,000 over 4 years. What is the ARR?
33.3%