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Business Studies IGCSEPDF 24
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Profit after all expenses, including overheads, have been deducted.
Formula:
Net profit = Gross profit − Expenses
Total cost = Fixed cost + Variable cost
● Break-even:
The point at which total revenue equals total cost — no profit or loss.
● Break-even chart:
A graph showing how costs and revenues vary with output and where they are
equal.
● Margin of safety:
The amount by which actual output exceeds the break-even output.
● Income statement:
A financial statement showing a business’s revenue, costs, and profit over a
period.
● Gross profit:
Profit made after subtracting cost of sales from revenue.
Formula:
Gross profit=Revenue−Cost of sales
A statement showing the value of a business’s assets, liabilities, and capital at a
specific date.
Assets:
Resources owned by a business that have value.
Non-current (fixed) assets:
Assets used for more than one year (e.g. machinery, buildings).
Current assets:
Assets that are likely to be converted into cash within one year (e.g. inventory,
receivables, cash).
Liabilities:
Amounts the business owes to others.
Non-current liabilities:
Debts due for repayment after more than one year (e.g. bank loans).
Current liabilities:
Debts due within one year (e.g. trade payables, overdrafts).
Net profit:
Statement of financial position (balance sheet):