Eric Asare unit 3 p3
Part A of P3
Gross profit
What is meant by Gross profit?
A company's revenue minus its cost of goods sold. Gross profit is a company's
residual profit after selling a product or service and deducting the cost
associated with its production and sale.
Give an example of how you would calculate Gross profit?
Income statement, take the revenue and subtract the cost of goods sold.
Using your business as an example;
Money coming take away the cost of how much you brought the product
Show an example of how you would calculate Gross profit.
Revenues and the cost of the goods sold take away the total costs of your goods
from the revenues the sales make
smallbusiness.chron.com/calculate-gross-profit-margin-percentage-4133.html
Net profit (Operating profit)
Net profit is calculated by subtracting a company's total expenses from total
revenue, thus showing what the company has earned (or lost) in a given period
of time (usually one year). Also called net income or net earnings.
Read more: http://www.investorwords.com/3259/net_profit.html#ixzz3EL2g5R5w
t is meant by Net Profit?
Give an example of how you would calculate Net profit
Add up your annual expenses for the running of your business & subtract that
figure from your gross profit.
Using your business as an example;
By dividing net profit by total revenue you would be able to see what percentage
of revenue will make it all the way to the bottom line and which is good for
investors.
Show an example of how you would calculate Net profit.
Net profit= Gross Profit take away Expenses
Gross Profit= Total revenue take away the cost of goods (shoes)
my business is a designer men clothing shop
Total revenue-£6,000
1 | Page
, Eric Asare unit 3 p3
Cost of goods sold-£1,000
Gross Profit = (£6,000-£1,000) =£5,000
My gross profit is £5,000.
Expenses
Utilities=£100
Rent=£1,500
Salary-£500
Insurance-£1,200
Advertisement-£200
TOTAL=£3,500
NET PROFIT = (gross profit-total expenses)=£5,000-£3,500
NET PROFIT =£1,500
sales revenue £ £
shoes £2,000
bags £1,000
watches £3,000
key rings £500
clothing £5,000
hats/caps £1,000
in soles £200
total revenue £12,700
cost of stock
shoes £1,000
bags £500
watches £1,500
key rings £250
clothing £2,500
hats/caps £500
in soles £100
total stock £6,350
total revenue-cost of stock £6,350
overheads
advertisement £1,000
utilities £1,500
wages £5,000
rent £2,000
total overhead £9,500
2 | Page
Part A of P3
Gross profit
What is meant by Gross profit?
A company's revenue minus its cost of goods sold. Gross profit is a company's
residual profit after selling a product or service and deducting the cost
associated with its production and sale.
Give an example of how you would calculate Gross profit?
Income statement, take the revenue and subtract the cost of goods sold.
Using your business as an example;
Money coming take away the cost of how much you brought the product
Show an example of how you would calculate Gross profit.
Revenues and the cost of the goods sold take away the total costs of your goods
from the revenues the sales make
smallbusiness.chron.com/calculate-gross-profit-margin-percentage-4133.html
Net profit (Operating profit)
Net profit is calculated by subtracting a company's total expenses from total
revenue, thus showing what the company has earned (or lost) in a given period
of time (usually one year). Also called net income or net earnings.
Read more: http://www.investorwords.com/3259/net_profit.html#ixzz3EL2g5R5w
t is meant by Net Profit?
Give an example of how you would calculate Net profit
Add up your annual expenses for the running of your business & subtract that
figure from your gross profit.
Using your business as an example;
By dividing net profit by total revenue you would be able to see what percentage
of revenue will make it all the way to the bottom line and which is good for
investors.
Show an example of how you would calculate Net profit.
Net profit= Gross Profit take away Expenses
Gross Profit= Total revenue take away the cost of goods (shoes)
my business is a designer men clothing shop
Total revenue-£6,000
1 | Page
, Eric Asare unit 3 p3
Cost of goods sold-£1,000
Gross Profit = (£6,000-£1,000) =£5,000
My gross profit is £5,000.
Expenses
Utilities=£100
Rent=£1,500
Salary-£500
Insurance-£1,200
Advertisement-£200
TOTAL=£3,500
NET PROFIT = (gross profit-total expenses)=£5,000-£3,500
NET PROFIT =£1,500
sales revenue £ £
shoes £2,000
bags £1,000
watches £3,000
key rings £500
clothing £5,000
hats/caps £1,000
in soles £200
total revenue £12,700
cost of stock
shoes £1,000
bags £500
watches £1,500
key rings £250
clothing £2,500
hats/caps £500
in soles £100
total stock £6,350
total revenue-cost of stock £6,350
overheads
advertisement £1,000
utilities £1,500
wages £5,000
rent £2,000
total overhead £9,500
2 | Page
