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Hi Sir,
Hope you are well!
1) In first question , I wanted to understand how have they calculated Operating profit margin, inventory turnover and TP payment period ?
2) In 2nd part – how did they calculated the mark-up of 33% ?Sir, this question is from BPP revision kit, apologizes for not mentioning it earlier.
Operating profit margin is operating profit divided by sales. You will need to adjust the gross profit to work out the operating profit.
Inventory turnover is revenue divided by inventory.
Payables payment period is payables divided by cost of sales multiplied by 365.
Try calculating them and we can then see where you are going wrong.
The mark up will be the gross profit divided by the cost of sales. Again, try it and you should get the 33.3%, even though the numbers used are different to those used in the calculation at the back.
Thanks
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