Tag: business

What is Net Profit Percentage?

Net Profit % before/after Tax = Net Profit before or after Tax /Sales Net Profit % before/after Tax shows the profit per R1 of sales after all expenses, excluding/including tax Higher the Net Profit %, the higher the profitability, after expenses

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What is Gross Profit Percentage?

Gross Profit % is also known as Gross Margin % Gross Profit % = Gross Profit / Sales Higher the gross profit %, higher the profitability of business, after direct costs

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What is Net Profit?

Gross Profit Less Operating Expenses  = Net profit before tax Less Tax = Net Profit after tax Net Profit shows the profit, after all expenses, available to the owners of the business  

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What is Gross Profit?

Sales Less Cost of Sales = Gross Profit Gross Profit excludes operating expenses, interest and taxation Gross Profit shows the profit after deducting direct costs of making a product  

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What is a provision for Bad Debts?

Provision for Bad Debts  100% of debtors are unlikely to pay the amount owed to the business. A % will not be collected/received Provision for Bad debts is an estimate of the debts that will not be paid in the financial year Estimate based upon historic info,  debtors analysis and trends

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What is a Bad Debt?

Bad Debt  Bad debt is amount owed to the business, that will not be collected/received Bad debt is shown under Expenses in the Income Statement Bad debt will reduce Debtors in the Balance Sheet

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What is the Debtor Schedule?

Debtor Schedule Debtor schedule usually prepared with the cash budget Debtor schedule shows R to be collected from debtors over the budgeted period Debtor schedule used for planning, budgeting and cash flow management

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What is the Debtor collection period?

Debtor Collection Period Collection Period = Debtors/Credit sales * 365 = number of days It shows the number of days from the sale until cash is received by the business The higher the number, the longer debtors are taking to pay the business

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What are Operating Expenses?

Operating Expenses Operating expenses arise in normal operation & running of the business – the day to day activities Operating Expenses not directly related to sale or production Examples Rent Salaries Travel

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What is a Prepaid Expense?

Prepaid Expense Prepaid expense is expense paid in the current the financial year in respect of the following financial year Prepaid Expense will decrease the expense in the Income Statement Prepaid Expense is shown under Current Assets, in the Balance Sheet

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