* Net profit percentage – This calculation takes the idea of profitability one stage further by actually considering the profit as a percentage of turnover after all the other expenses have been taken out. Looks something like this: Net profit x100 = net profit percentage Turnover * Return of capital employed – This calculation is worked out by considering the net profit as a percentage of the capital employed by that business. The reason this ratio is useful because it shows the amount of money an investor is receiving back on their capital as a percentage. This means they can
TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION The ability of a business to meet its short-term cash requirements is called liquidity. It is affected by the timing of a company’s cash inflows and outflows along with prospects for future performance. Efficiency refers to how productive a company is in using its assets, and it is usually measured relative to how much revenue is generated from a particular level of assets. They are both important and complementary. Two measures for evaluating a business's short-term liquidity are working capital and the current ratio.
egt1 task 1 A. Explaining profit maximization from the approach of total revenue to total cost is by taking the total revenue to the total cost that relies on the fact that the profit would equal revenue minus the cost and would focus on the point of profit maximization. So this means that profit maximization will be achieved when total revenue to total cost has the largest gap between the two. Explaining profit maximization by the approach of marginal revenue to marginal cost, you would have to take marginal revenue minus the marginal cost to get the marginal profit or when you see that marginal revenue equals marginal cost then that is where profit maximization
From this analysis, and based on the different figures given by the standard unit procedure and activity based costing, we can conclude that Destin Brass co. is undervaluing flow controllers and can in fact afford to raise the price. This may explain why past price increases have not negatively affected demand. I recommend that the company adopt an activity-based costing strategy which will allow for the price of flow controllers to be increased and that of pumps to be decreased whilst still maintaining the desired 35% gross margin. This
When the buy-back price is more than or equal to $75, the buyer would purchase 18,000 units because the buyer could receive the largest profit in 18,000 units compared with other quantities. This decision doesn’t make sense, because the manufacture should focus on the profit, and his goal is to maximize the profit. From the trend analyzed above, the profit would decrease as the buy-back price increases when the order quantity is fixed, so to induce the buyer to purchase the
EGT1 TASK 1 McConnell, Brue and Flynn define Marginal Revenue as “the change in total revenue that results from the sale of one additional unit of a firm’s product; equal to the change in total revenue divided by the change in the quantity of the product sold.” (McConnell, Brue and Flynn, 2012). When we look at the relationship between total revenue and marginal revenue we can see that it is purely a mathematical relationship. The formula that is used to determine Total Revenue is the following; Total Revenue = Price X Quantity, (TR = P X Q). McConnell, Brue and Flynn also define Marginal Cost they state that it is “the extra cost of producing one more unit of output; equal to the change in total cost divided by the change in output.” (McConnell, Brue and Flynn 2011). The marginal cost and total cost is directly related to each other.
Question 1 (A) The purpose of a profit and loss account is to examine the income earned verses the expense incurred to a business, resulting in profit, if income is higher, and loss if expenses supersede the income. Michael's Chairs can use this information to make sure his business is profitable. • He can see if he is meeting targets to repay loans and overdrafts. • He can assess his expenses and see if they are too high. • He can see if his investments in new machinery are paying dividends.
Producer surplus is closely related to the supply curve and is measured using the graphical representations. b. What is the relationship between the cost to sellers and the supply curve? The relationship between the cost to sellers and the supply curve is the area below the price and above the supply curve measures the producer surplus in a market. c. Other things equal, what happens to producer surplus when the price of a good rises?
Equilibrium in the asset market is described by the condition that real money supply equals real money demand because when supply equals demand for money, demand must also equal supply for nonmonetary assets. The aggregation assumption that is needed for this is that we can lump all wealth into two categories: (1) money and (2) nonmonetary assets. 8. In equilibrium, the price level is proportional to the nominal money supply; in particular it equals the nominal money supply divided by real money demand. Similarly, the inflation rate is equal to the growth rate of the nominal money supply minus the growth rate of real money demand.