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Definition of Profit centre
A division or unit of an organization that is responsible for achieving profit targets.
A division or unit of an organization for which a manager is held responsible – may be a cost centre, profit centre or investment centre.
The ratio of net income to net sales.
The ratio of net income before taxes to net sales.
The cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT.
This equals the cash inflow from sales during the period minus the cash
The profit made by a division after deducting only those expenses that can be controlled by the
A division or unit of an organization that is responsible for controlling costs.
A method for understanding the relationship between revenue, cost and sales volume.
analysis a procedure that examines
This first-line measure of profit
The profit a company makes before expenses and taxes are taken away.
The difference between the price at which goods or services are sold and the cost of sales.
The result of subtracting cost of goods sold from sales. Synonymous with gross margin.
Revenue less cost of goods sold.
Gross profit divided by sales, which is equal to each sales dollar left over after paying
Gross Profit Margin
Gross profit divided by revenue.
A division or unit of an organization that is responsible for achieving an adequate return on
See operating profit.
Net profit margin
Net income divided by sales; the amount of each sales dollar left over after all expenses
The profit made by the business for an accounting period, equal to gross profit less selling, finance, administration etc. expenses, but before deducting interest or taxation.
See earnings before interest and income tax (EBIT).
Operating profit margin
The ratio of operating margin to net sales.
a temporary absorption costing profit caused
What’s left over after you subtract the cost of goods sold and all your expenses from sales.
The difference between income and expenses.
The general term profit is not precisely defined; it may refer to net
Profit and Loss account
A financial statement measuring the profit or loss of a business – income less expenses – for an accounting period.
profit and loss statement (P&L statement)
This is an alternative moniker
Profit before interest and taxes (PBIT)
a responsibility center in which managers are responsible for generating revenues and planning and controlling all expenses
An entity within a corporation against which both revenues and costs are
Indicator of profitability. The ratio of earnings available to stockholders to net sales.
the ratio of income to sales
Profit Margin Ratio
A measure of how much profit is earned on each dollar of sales. It
This concept refers to a separate source of revenue and
Ratios based on sales revenue for a period. A measure of
an incentive payment to employees that is
Profit Sharing Plan
A retirement plan generally funded by a percentage of company
a visual representation of the amount
The present value of the future cash flows divided by the initial investment. Also called
See cash value added.
A method for determining the profitability of an investment. It is
Ratio of net present value to initial investment.
profitability index (Pl)
a ratio that compares the present value of net cash flows to the present value of the net investment
Ratios that focus on the profitability of the firm. profit margins measure performance
pseudo microprofit center
a center for which a surrogate
real microprofit center
a center whose output has a market value
The amount of profit after deducting interest, taxation and dividends that is retained by the business.
A probability used to determine a "sure" expected value (sometimes called a
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