Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Net Profit Margin
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- May 11, 2016 at 7:12 pm #314642
In BPP REVISION KIT TFR Co.(FMC, 6/07), the net profit margin is given to be 20%. This net profit margin is taken in the solution as before interest and tax but in reality net profit margin is after interest and tax. Please clarify the same.
May 12, 2016 at 6:08 am #314687In financial accounts, net profit is indeed after interest and tax.
However we are not doing financial accounts here, and when measuring the performance of the managers, net profit always means net operating profit (i.e. before interest and tax). (Which is sensible – the managers have no control (for example) on changes in tax rates and should not be measured on it.)
I do make this point in the free lectures.
(Our free lectures are a complete course for Paper F9 and cover everything needed to be able to pass the exam well.)
May 12, 2016 at 10:48 pm #314833Thank you.
May 13, 2016 at 9:29 am #314903You are welcome 🙂
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