Quiz & Worksheet - Profitability

question 1 of 3

What is the difference between profit and profitability?

Nothing, they are synonymous Profit is a measure related to a product while profitability is a measure related to the entire business

Profit is what is left of revenue after all business expenses are paid and profitability is the ability to make a profit Profit is a measure used internally by a business while profitability is a measure used by investors

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Worksheet

Print What Is Profitability? - Definition & Analysis Worksheet

1. This year your company had a net income of $165,000 and net sales of $2,500,000. What is your net profit margin? What does it mean?

0.066 cents, which is the net income per dollar of sales
66 cents, which is the net income per dollar of sales
0.006 cents, which the net income per dollar of sales
6.6 cents, which is the net income per dollar of sales

2. Your company earned a gross profit of $2,000,000 last year and had net sales of $18,000,000. What was your gross margin and what does it mean?

0.11% A gross margin of 0.11% means out of every dollar you make in sales, you spend almost all of it to produce the product you sold
11% A gross margin of 11% means out of every dollar you make in sales, you spend 89 cents to produce the product you sold
There's not enough data to make the calculation
9% A gross margin of 9% means out of every dollar you make in sales, you spend 91 cents to produce the product you sold

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About This Quiz & Worksheet

In addition to calculating gross profit margins, net profit margins, and equity, this quiz/worksheet will ask you to answer questions about profit, profitability, gross margin, and operating margin.

Quiz & Worksheet Goals

To be more precise, you will be examined on your understanding of:

The difference between profit and profitability
Solving for net profit margin
Solving for gross profit margin
The difference between gross margin and operating margin
Solving for equity

Skills Practiced

Information recall - access the knowledge you've gained regarding profit
Distinguishing differences - compare and contrast topics from the lesson, such as gross and net profit margin
Critical thinking - apply relevant concepts to examine information about making money in a different light
Reading comprehension - ensure that you draw the most important information from the related profitability lesson

Additional Learning

Still curious about profitability? Take a look at the associated lesson named What Is Profitability? - Definition & Analysis. You can use this tutorial to learn more about:

Net and gross profit
Return on assets
Return on equity
Analyzing profitability

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What is the difference between profit and profitability?

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1. This year your company had a net income of $165,000 and net sales of $2,500,000. What is your net profit margin? What does it mean?

2. Your company earned a gross profit of $2,000,000 last year and had net sales of $18,000,000. What was your gross margin and what does it mean?

About This Quiz & Worksheet

Quiz & Worksheet Goals

Skills Practiced

Additional Learning

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