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When trying to pass a numerical reasoning test the maths can be quite tricky but also there is often quite a bit of technical terminology and business related jargon that is used. The following business related terms are defined to not only help you with your numerical reasoning test but also to help you feel more comfortable within a business environment.

## What is net profit?

The amount of money you generate from sales of a product (or service) after you deduct the cost of purchasing the product as well as the cost of overheads.

## What does net profit margin mean?

Once you have calculated your net profit, you can use this figure to calculate the percentage to total sales. This percentage is called your margin, or profit margin.

## What is gross profit?

Gross profit is the amount of money you generate from sales of a product (or service) after you deduct the cost of purchasing the product.

## How do I calculate percentage increase?

Percentage increase is the difference between your starting value and the increase, divided by the original then multiplied by 100.

## How do I calculate percentage decrease?

Percentage decrease is the difference between your starting value and the decrease, divided by the original amount then multiplied by 100.

## What is meant when talk about the mark up in business?

The mark up is the amount added to the cost of a product or service before it is resold.

## What is meant by compound growth?

This is a percentage increase where each time period the percentage is applied to the new value then added on. A good example of this is interest from banks, they add the interest on to your balance then when they calculate the amount of interest they owe you next time they apply the percentage to the new amount, so in effect you get interest in paid on the previous lot of interest you received as well as your original amount.

## What is compound depreciation?

Similar to compound growth but it is where something decreases by a certain percentage each time period.

## Accounting Period definition

The period in which a company completes its financial accounts. The term accounting period often refers to a company’s annual accounts which can end at any time of the year depending on when the company started trading. Companies sometimes alter their accounting period to be in line with the calendar year or the tax year.

There are many business acronyms used, some general and some industry specific. The following business acronyms are some of the most common ones found across many sectors.

KPI – Key performance indicator