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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Profit Ratio.
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?
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!)