Sales Revenue: - Business Studies
Sales Revenue:
This is the amount of money that the business generates from the products and services that they sell
Formula:
Sales Revenue = Price x Quantity of goods sold
Example – A sandwich seller sells on average 70 sandwiches every lunch time at a price of £2 each
Sales Revenue = 2 x 70 = £140
Profit:
This is the amount of money that the business gets from selling its products after ALL COSTS have been deducted
PROFIT = SALES REVENUE – TOTAL COSTS
. (FIXED COSTS + VARIABLE COSTS)
Why is profit important?
► Because… It rewards the business owner for the risk of setting up a business
T.I.I.B… without any reward then no one would be prepared to risk their money in making an investment, and the business would never be able to open
► Because.. it can be used by the business owner as a source of finance and be re-invested back into the business
T.I.I.B it will help the business grow and gain even greater sales and profit in the future if it is able to invest into new strategies such as product development or market development.
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