Question 1

What is gross profit margin?

Accepted Answer

Gross profit margin is the percentage of revenue remaining after subtracting the cost of goods sold (COGS). It is calculated as (Revenue - COGS) / Revenue x 100.

Question 2

What is the difference between gross and net margin?

Accepted Answer

Gross margin only deducts cost of goods sold, while net margin also deducts operating expenses like rent, salaries, and utilities.

Question 3

What is the break-even point?

Accepted Answer

The break-even point is the revenue level where total costs equal total revenue, meaning there is no profit or loss. It is calculated as Fixed Costs / (1 - Variable Costs / Revenue).

Question 4

How is business ROI calculated?

Accepted Answer

ROI (return on investment) is calculated as (Net Profit / Initial Investment) x 100. It indicates how much return each monetary unit invested generates.

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