Profit margin
A profit margin compares a specified profit measure with revenue, multiplied by 100. First identify which profit the question requires, then divide it by revenue and multiply by 100. Gross margin uses gross profit, while an operating or net margin uses a later subtotal. A change can reflect selling prices, product mix or costs and requires further investigation. Express the result in percentage points when describing the difference between two margin percentages.
Worked example
Profit before tax 60 on revenue 1,000 gives a 6% margin.
Common mistake
Specify whether profit is operating, before tax or after tax and use the question's convention consistently.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F2 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA2 | Direct | Official assessment-window verification pending |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |