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the asset turnover is 2.0 . the capital employed is 15%.
what is profit margin in Percentage?
You must surely have an answer in the same book in which you found the question (I assume you are using a Revision Kit from one of the ACCA Approved Publishers, as you should be doing). So in future please ask about whatever it is in the answer that you are not clear about and then I will explain 🙂
It will be the return on capital employed that is 15% (not the capital employed!!).
The return on capital employed = assets turnover x profit margin
Therefore 15% = 2 x profit margin
So the profit margin = 15/2 = 7.5%
This is all explained in my free lectures on ‘financial performance measurement’. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
I wanna need FMA Budgeting variance and performance measurement topics lectures?
I do not know why you are posting this under a thread headed up ‘ratios’ because it has nothing to do with ratios!!!
Paper FMA is the same as Paper MA, and you can find lectures covering the whole syllabus linked from the main Paper MA page.
Sir, Thank you for the reply
The question was asked me in the exam i did on MA1 but some how the exam was interrupted and we had to leave in between without completing the ACCA exam but one of the question that was stuck in my head and I don’t know how to solve/answer it so i just posted it, may be you may help
Thank you so much sir. I appreciate the time you have taken to help. Once again Thank you so much
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