Topic 2.4.1 - .4.2

• How do we calculate gross profit?

  Sales revenue - cost of sales
• How do we calculate gross profit margin?

  Gross profit/sales revenue x 100
• How do we calculate net profit?

  Gross profit - expenses
• How do we calculate net profit margin?

  Net profit/sales revenue x 100
• How do we calculate Average Rate of Return (ARR)?

  average annual profit(total profit/no. of years) / cost of investment x 100
• What is financial data?

  Financial data is quantitative data that contains information about the financial performance and financial position of a firm.
• What are uses of financial data?

  Internal performance assessment - useful in spotting when the firm is not doing well and getting to the bottom of why the business is not doing well

  Investor assessment - financial data can be used by investors to see if its worth investing in the business

  Competitor assessment - financial data can be used to compare a firm's performance to the performance of their competitors
• What are limitations of financial data?

  • Can sometimes be based on people's judgement or computer modelling
  • May only be given a snapshot of financial performance at a time which can be misleading
  • Looking at a firm's financial data does not always give a good idea of that firm's performance
• What is marketing data?

  Can be either qualitative or quantitative data that contains information about a business’s promotions, advertisements and customer preferences/feedback
• How is marketing data collected?

  From online advertisements, surveys and questionnaires which can help a business improve their product and the overall experience of the customers
• What is market data?

  Data used by a firm to get an idea of their market share compared with their competitors.

  Its used to:

  • show trends in the market
  • compare a firm's financial performance to competitors
• What is information from graphs and charts?

  Businesses often use information from graphs and charts. They make it easy for people to interpret the information quickly and help businesses to spot trends in the data that they may not otherwise have spotted from simply looking at numbers on a page.