Profit and loss account part two: ratio analysis Flashcards
1
Q
Gross profit margin
A
Gross profit margin is the percentage of money left after paying for a business’ costs of sales. It shows how much gross profit is made for every pound of sales revenue received. It assesses how well businesses manage variable costs (cost of sales) in the business.
2
Q
Gross profit margin formula
A
Gross profit/sales revenue x 100
3
Q
Net profit margin
A
The net profit margin is the proportion of sales revenue that is left once all costs have been paid
4
Q
Net profit margin formula
A
Net profit/ sales revenue x100
