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Economic and management sciences

Grade 8

Business, consumer and financial knowledge and skills

Module 11

Leadership and business strategies to ensure profit

ACTIVITY 1: To be able to explain and apply the term profit [LO 3.2]

The nature of profit

Profit can be regarded as the difference between the income and expenditure of a business.

It is the amount by which income exceeds the expenditure incurred to produce the income.

The main objective of anyone who starts a business is to make maximum profit. This profit can be regarded as the owner’s compensation for the use of his capital. The profit he makes must be considerably more than the interest he would have earned if he had invested the money in the bank.

It is important for the business to be managed in such a way as to ensure a good return on the owner’s capital investment in his business.

Calculating profit

In order to calculate the profit, certain information about the business is required. This is obtained from a statement that is usually drawn up at the end of the financial year. The statement contains the income generated during a particular period, as well as the expenditure incurred in order to generate that income. This statement is called an Income Statement.

When calculating profit, businesses can be divided into two main groups according to the nature of their activities, namely:

service enterprises and

commercial enterprises

Service enterprises provide a service and earn an income by doing so, for example hairdressers, dry-cleaning businesses, medical practitioners, dentists, etc.

Commercial enterprises purchase merchandise and sell it at a higher price than the purchase price to make a profit.

The profit of these businesses can be calculated by doing a simple deduction, namely:

Profit = Income – Expenditure

  • Explain in your own words what you understand by the term profit .

Activity 2: to be able to explain and apply strategies to ensure a good profit on earnings [lo 3.2]

Effective leadership and management strategies are used to minimise expenditure and maximise income of a business.

One strategy is to exercise strict control over expenditure such as telephone, water, electricity, transport costs, stationery and advertising. These expenses must be compared monthly. If there is a significant increase the cause must be found and rectified.

At the same time the income must be kept as high as possible.

In a service enterprise, excellent service must be provided at all times, because satisfied clients are the best advertisement for any business.

In the case of commercial enterprises, the lowest possible purchase price and the highest possible selling price must be negotiated. One needs to compare the prices that other businesses charge for the same product or service.

A smaller profit margin in the short term could ensure a more sustainable profit in the long term.

The value of advertising and marketing campaigns must not be underestimated. These can be very expensive so the benefits must be weighed up against the costs.

Questions & Answers

An investment account was opened with an initial deposit of $9,600 and earns 7.4% interest, compounded continuously. How much will the account be worth after 15 years?
Kala Reply
lim x to infinity e^1-e^-1/log(1+x)
given eccentricity and a point find the equiation
Moses Reply
12, 17, 22.... 25th term
Alexandra Reply
12, 17, 22.... 25th term
College algebra is really hard?
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find the 15th term of the geometric sequince whose first is 18 and last term of 387
Jerwin Reply
I know this work
The given of f(x=x-2. then what is the value of this f(3) 5f(x+1)
virgelyn Reply
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it think it's written 20/(X-6)^2 so it's 20 divided by X-6 squared
I'm not sure why it wrote it the other way
I got X =-6
ok. so take the square root of both sides, now you have plus or minus the square root of 20= x-6
oops. ignore that.
so you not have an equal sign anywhere in the original equation?
is it a question of log
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Commplementary angles
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what is a good calculator for all algebra; would a Casio fx 260 work with all algebra equations? please name the cheapest, thanks.
Kevin Reply
a perfect square v²+2v+_
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Abdirahman Reply
algebra 2 Inequalities:If equation 2 = 0 it is an open set?
Kim Reply
or infinite solutions?
The answer is neither. The function, 2 = 0 cannot exist. Hence, the function is undefined.
Embra Reply
Jeannette has $5 and $10 bills in her wallet. The number of fives is three more than six times the number of tens. Let t represent the number of tens. Write an expression for the number of fives.
August Reply
What is the expressiin for seven less than four times the number of nickels
Leonardo Reply
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how do you translate this in Algebraic Expressions
linda Reply
why surface tension is zero at critical temperature
I think if critical temperature denote high temperature then a liquid stats boils that time the water stats to evaporate so some moles of h2o to up and due to high temp the bonding break they have low density so it can be a reason
Need to simplify the expresin. 3/7 (x+y)-1/7 (x-1)=
Crystal Reply
. After 3 months on a diet, Lisa had lost 12% of her original weight. She lost 21 pounds. What was Lisa's original weight?
Chris Reply
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Source:  OpenStax, Economic and management sciences grade 8. OpenStax CNX. Sep 11, 2009 Download for free at http://cnx.org/content/col11040/1.1
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