BUS 082 Chapter Notes - Chapter 10: Gross Profit, Operating Cash Flow, Accounts Receivable

• School: College of The Sequoias
• Department: Business (BUS)
• Course: BUS 082
• Professor: Porterfield

Document Summary

What does the data show, indicate about the business. Calculating change %: amount change/old x 100. Look at dollar change as well as percentage change. Any year $ / base year $ = trend % Base year is 100%, find other year e. g. 120% show increase. Compare one company to another or to industry average. See how you are performing, how efficient. No two businesses are identical, different structure, employees, size etc. Net profit margin = npbit/salese x 100. Price cost of making a product = profit. Increased sales does not necessarily mean increased profit. For most, inventory is a huge cost. If they"re not turning over that product quickly enough, cost a lot. If high need to think about why, measures to sell the stock e. g. discounts. Want a low turnover, should never buy too much. Average settlement period = average accounts receivable / credit sales x 365. If don"t collect quickly, can"t settle own liabilities.