Turnover is calculated by multiplying the sales price of a product by the number of units sold. For example, if a company sells 10 computers per week at £800 each, their weekly turnover is £8,000. Their annual turnover would be £8,000 x 52 weeks, which is £41,600. Profit is calculated by taking a company's turnover and subtracting all costs from it. Higher profits allow companies to expand more easily. Companies that make consistent losses will eventually go out of business.

1. Turnover and Profit Turnover/Sales Revenue Is the value of coming into the company. We measure this by multiplying the of the product by the of units sold. sales price number

2. Turnover and Profit So, if a company sells computers at £800 each and sells 10 in a week their turnover is £8000 for that week. If he sells 10 computers every week for one year his turnover for the year is £41,600 (£8000 x 52)

3. Task Complete section one on your worksheet

4. Extra Tasks 1: If a clothes shop has a turnover of £15,000 in the first week of January, why will simply multiplying this by 52 not give an accurate figure for the year? 2: If a shop has an annual turnover of £120,000, and they sold 40,000 products all at the same price, how much did each product cost?

5. Profit Total profit is measured by taking away all of a firm’s from its PROFIT = TURNOVER - COSTS costs turnover

6. Why is Profit Important? Profit is often used as a measure of a company’s Higher profits make it easier for firms to If the profit falls, the prices of may also fall. Firms that make a loss will eventually go out of success . expand . shares business .

7. Task Complete section Two on your worksheet

8. Extra Tasks Explain exactly how the following changes would affect profit: A firm in a highly competitive industry increases its prices by 8% Demand for a firm’s products fall sharply due to changing fashions. New production methods increase a firm’s factory reject rate.