Profitability

Question 1

What is profit

Answer 1

Profit is an absolute measure of the amount of money a business makes after accounting for all expenses, profit = total revenue - total expenses

Question 2

What is meant by profitability and what does it measure

Answer 2

Profitability is the size of profit relative to the size of business. Measures how efficient the business is in using its resources to produce profit. Profitability is a relative measure of the success or failure of a business

Question 3

Is it possible to generate profit and not be profitable

Answer 3

Yes

Question 4

Gross profit margin calculation

Answer 4

Gross profit / revenue x 100

Question 5

Net profit margin calculation

Answer 5

Net profit / revenue x 100