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Describe 4 pieces of financial information contained in an Income Statement. - Scottish Highers Business Management - Question b - 2022
Question b
Describe 4 pieces of financial information contained in an Income Statement.
Worked Solution & Example Answer:Describe 4 pieces of financial information contained in an Income Statement. - Scottish Highers Business Management - Question b - 2022
Step 1
Sales Revenue/Turnover
Answer
Sales revenue, often referred to as turnover, represents the total amount of money generated from the sale of goods or services during a specific period. This figure is critical as it indicates the business's ability to generate income through its core operations.
Step 2
Step 3
Gross Profit
Answer
Gross profit is calculated by subtracting the cost of sales from the sales revenue. It provides insight into the financial health of the business by showing how much profit is made before deducting operating expenses, taxes, and other costs. This figure is pivotal for measuring efficiency.
Step 4
Operating Expenses
Answer
Operating expenses include the costs required to run a business that are not directly tied to producing goods or services. These may encompass rent, utilities, and salaries. Analyzing operating expenses is essential for determining how effectively a business is managing its overheads.