Profit analysis
Profit analysis examines how revenue, costs and margins change and why. Start by comparing revenue and cost of sales to find changes in gross profit and gross margin. Then examine operating expenses and other relevant income and costs. Use the figures as evidence for possible causes, rather than asserting a cause that the data does not establish. A higher revenue figure alone does not prove that the business is more profitable.
Worked example
Revenue rises 10% while gross profit falls, suggesting cost or pricing pressures worth investigating.
Common mistake
Use comparable periods and investigate mix and one-off items; ratios alone do not establish cause.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Supporting | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Supporting | September 2026–June 2027 |
