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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Net profit margin
Question:
A business operates on a gross profit margin of 33 1/3%.Gross profit on sales was $800 and expenses were $680.
What is the net profit?
Answer: 5%.
What is the calculation approache? kindly help me to solve this sir.
The sales must be 800 x 3 = 2400 (so the gross profit is 1/3 x sales).
The net profit is 800 – 680 = 120.
So the net profit margin is 120/2400
How can you get the sales revenue =800*3?
If the gross profit is sales x 1/3, then sales must be gross profit x 3.
(33 1/3% = 1/3)