2.4 content

• equation for market share

  business sales/ market sales x 100
• equation for annual profit

  total profit/ number of years
• equation for average rate of return (arr)

  average annual profit/ cot of investment x 100
• what is arr

  quantitative method to see whether the investment is worthwhile
• whats an investment

  when money is used to purchase an asset to later generate profit
• whats the difference between net and gross profit

  gross profit- tells us if the products are successful net profit- tell us if the business is successful
• net profit margin

  Net Income/Sales revenue x 100
• gross profit margin equation

  gross profit/ sales revenue x 100
• net profit equation


  gross profit- other expenses
• what is net profit

  profit the business generates after paying expenses and interest
• gross profit equation

  revenue- cost of sales
• what is gross profit

  the amount of money the business makes after costs of sales are deducted from sale revenue
• contribution formula

  Selling price - variable costs
• profit equation

  profit= revenue- expenses
• total costs equation

  fixed costs + variable costs
• variable costs equation

  cost x quantity
• Revenue equation

  revenue = Price x Quantity