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Net profit margin

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Net profit margin

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
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  • November 3, 2020 at 5:46 am #593896
    gayathree1234
    Member
    • Topics: 40
    • Replies: 1
    • ☆

    Hi sir,

    I know net profit margin is calculated as net profit/revenue.But im unsure what are the items to be included in the revenue.

    Revenue X
    other operating income x
    changes in inventories and x
    work performed

    so Net profit margin is calculated as:
    1)Net profit/revenue X 100% OR
    2)Net profit/( revenue+other operating income+changes in inventories…) X 100%

    Thank you…

    November 3, 2020 at 10:14 am #593921
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54804
    • ☆☆☆☆☆

    You would normally include other operating income (but not anything else).

    If you have come across this in a Paper FM past exam question then I would be very surprised (even asking for the net profit margin is rare for Paper FM!)

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