Ch16

Question 1

gross profit margin

Answer 1

gross profit/net sales revenue x100%

Question 2

mark up on cost

Answer 2

Gross profit/cost of sales x100%

Question 3

Return on equity

Answer 3

Amt of profit earned for each dollar invested by owner

Profit/ average equity x 100%

Question 4

How to improve gross profit

Answer 4

Sell goods at higher selling prices
Buy goods at lower cost prices

Ie. buy in bulk to obtain trade discount

Question 5

How to improve profit for the year

Answer 5

• Increase sources of income
  Ie. sublet excess space to another business for rental income
• reduce operating expenses
  Negotiate for lower rental