Calculations (1)

An extract from a firm’s accounts for last year is shown in the table below: (£) Cost of sales 150,000 Other operating expenses and interest 40,000 Sales revenue 250,000 Based on this information, which of the following is the correct net profit for last year?

Which two of the following need to be subtracted from gross profit to calculate the net profit of a business?

• Interest

• Cost of sales

• Other operating expenses

• Turnover

• Sales revenue

Which two of the following could potentially cause an increase in net profit?

• Increase in sales revenue

• Decrease in sales revenue

• Increase in other operating expenses and interest

• Decrease in other operating expenses and interest

• Increase in cost of sales

Which of the following is the correct formula to calculate a firm’s gross profit margin (%)?

• Gross profit/sales revenue

• Sales revenue/gross profit

• Gross profit/sales revenue x 100

• Sales revenue/gross profit x 100

Which of the following best describes the proportion (%) of revenue left over after the cost of sales have been paid by the business?

• Net profit margin

• Gross profit margin

• Net profit

• Gross profit

Which of the following is the correct formula to calculate gross profit?

• Sales revenue – total overheads

• Sales revenue + total overheads

• Sales revenue – cost of sales

• Sales revenue + cost of sales

Which of the following is the correct formula to calculate a firm’s net profit margin?

• Net profit/sales revenue

• Sales revenue/net profit

• Net profit/sales revenue x 100

• Sales revenue/net profit x 100

The following information was provided for a business for last year: Last year (£‘000s) Sales revenue 1,000 Cost of sales 275 Other operating expenses and interest 400 Based on this information, which of the following is the correct gross profit for last year?

• £325,000

• £725,000

• £1,275,000

• £1,675,000

Which of the following statements is true if the sales revenue and cost of sales of a business remain the same as last year, but other operating expenses and interest payments increase this year?

• Gross profit will increase this year

• Gross profit will decrease this year

• Net profit will increase this year

• Net profit will decrease this year

Which of the following best describes the proportion (%) of revenue left over after the business has paid all direct and indirect costs?

• Net profit margin

• Gross profit margin

• Net profit

• Gross profit