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Profit Ratio.

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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February 19, 2015 at 7:01 am #229128
ahmed02
Member
- Topics: 17
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Margin 5%
opening inventory $800
closing inventory $600
purchases $2840
They said to complete the (IS).
I get the cost of sales amount $3040. But can’t calculate the gross profit . The gross profit answer is $160.How will be the calculation of gross profit?
February 19, 2015 at 8:55 am #229148
John Moffat
Keymaster
- Topics: 57
- Replies: 54675
Margin is the profit as a % of sales.
So for every $100 sales, the profit is $5 and the cost is $95.
So for every $95 cost, the profit is $5.
So here, the profit is 5/95 x 3040 = 160
(It will help you to watch the free lecture on mark-ups and margins!)
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