What is gross profit?
The money made from selling the product after the cost of producing the product has been deducted
How do you calculate gross profit?
Revenue - Cost of sale
What does cost of sale mean?
the direct costs to produce or acquire the specific goods or services a company sells, like materials, direct labour and packaging
What is the gross profit margin?
a key financial metric showing the percentage of sales revenue left after subtracting the direct costs of producing goods or services
How do you calculate gross profit margin?
(Gross profit/Revenue) x 100
What is net profit?
the amount of money left when all expenses/expenditures are deducted from the gross profit figure. Net profit is also referred to as the ‘bottom line’
How do you calculate net profit?
Gross profit - expenditures
What are expenditures/expenses?
all of the indirect costs of an enterprise. These are the costs of not associated with the product the enterprise sales e.g Rent, administration, manager salaries, advertising, utility bills
What is the net profit margin?
a key profitability ratio showing the percentage of revenue left after all expenses are deducted from total sales, indicating how much profit a company makes per pound of revenue
What are administrations?
Office stationary and supplies or just other random items a business needs to operate
How do you calculate net profit margin?
(Net profit/revenue) x 100
What are investment considerations?
@Total profits likely to be earned from the investment
@How quickly the investment will cover its cost
What is investment appraisal?
Assessing factors linked to the investment
What is average rate of return?
Financial metric that measures an investment’s profitability
How do you calculate average rate of return?
Average annual profit
——————————– x 100
cost of investment
What is average annual profit?
On average how much profit a business makes that your looking at investing in
How is average annual profit calculated?
Total profit/number of years
What are the parts of the design mix?
@Function
@Costs
@Aesthetics
What is function in the design mix?
what a product should do and how well it does it e.g washing machine should wash clothes
What is costs in the design mix?
how cost effective the product will be to manufacture e.g the product should be made and sold profitably
What is aesthetics in the design mix?
how the product appeals to customers e.g how the product looks, feels and smells
