Equations

Question 1

Net profit margin equation

Answer 1

Profit for the year / revenue x 100

Question 2

Return on capital employed equation

Answer 2

Profit for the year / capital + non current liabilities x 100

Question 3

Expense over revenue percentage equation

Answer 3

Expense / revenue x 100

Question 4

Gross profit margin equation

Answer 4

Gross profit / revenue x 100

Question 5

How would you find out gross profit if it’s not given?

Answer 5

Sales revenue - cost of sales

Question 6

What is markup ?

Answer 6

The percentage is added to cost to find selling price

So:
Sales 120%
Cost 100%
Profit 20%

Question 7

What is margin?

Answer 7

Gross profit as a % of selling price

So:

Sales 100%
Cost 80%
Profit 20%

Question 8

Is vat on SoFP or pl

Answer 8

SoFP

Question 9

Allowance for receivables on SoFP or pl

Answer 9

SoFP as a credit

Question 10

Allowance for doubtful receivables adjustment credit or debit and on SoFP or pl

Answer 10

Credit on pl

Question 11

Is a gain on a disposal credit or debit

Answer 11

Credit

Question 12

How do you work out net realisable value?

Answer 12

Expected selling price - cost for the damaged