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1. Which profit measure is often used to evaluate the business operating management team because it includes everything they are directly responsible for and does not include the factors that they have little control over?
Cash on hand.
2. What is the difference between Gross Profit and Operating Profit?
Gross profit and operating profit mean the same thing.
Gross profit is the operating profit before it has been adjusted to include the effects of interest and taxes.
Gross Profit only considers sales and the Cost of Goods Sold to determine profit. Operating Profit has through items and includes the operations costs – sometimes referred to as fixed cost or overhead costs – included in the calculation.
3. Which profit measure gives the best indication of the amount of profit that would be generated if you could sell just one more item?
Return on assets (ROA).
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