profitability ratios

Question 1

how do calculate percentage gross profit on turnover

Answer 1

gross profit / sales x 100%

Question 2

what do u compare percentage gross profit on turnover to

Answer 2

compare to previous year

Question 3

do u wat the percentage gross profit on turnover to increase pr decrease from last year to this year

Answer 3

it must increase as it shows what % of selling price is available to cover operating expenses

Question 4

if percentage gross profit on turnover decreases what does it mean happened

Answer 4

Sale prices incorrectly marked

marked toomuch trade discount

goods are sold for less than mark-up policy(stick clearance sales)

Question 5

percentage gross profit on turnover decreases

what wold you recommend

Answer 5

Check pricing

Avoid too much trade discount

Question 6

how do calculate percentage gross profit on cost of sales

Answer 6

gross profit / cost sales x 100%

Question 7

what should percentage gross profit on cost of sales be

Answer 7

it should be the mark up of the buisiness

Question 8

what d u compare percentage gross profit on cost of sales to

Answer 8

compare to mark up policy
compare to previous years

Question 9

do u want percentage gross profit on cost of sales to be greater than or less than mark up

Answer 9

it must be the same or greater

Question 10

what re te possible reasons if percentage gross profit on cost of sales is lower

Answer 10

prices incorrectly marked

toomuch trade discount

goods are sold for less than mark-up policy

Question 11

if percentage gross profit on cost of sales is lower what woud you recommend

Answer 11

Check prices of goods

Avoid giving too much discounts

Question 12

how do calculate percentage operating profit on sales

Answer 12

percentage operating profit / sales x 100%

Question 13

what does percentage operating profit on sales show

Answer 13

it shows how much of sale sis left over as a profit after subtracting expenses

Question 14

if percentage operating profit on sales is high or low what does it mean

Answer 14

high %- managing expenses well

low% - not managing expenses well

Question 15

what dow we compare percentage operating profit on sales to

Answer 15

to last years % to see whether the business is improving

Question 16

what if the percentage operating profit on sales is low
what’re reasons for this

Answer 16

A large amount of income is used to pay expenses

Question 17

what would you recommend if percentage operating profit on sales is Low

Answer 17

Increase control over expenses

Question 18

how do calculate percentage net profit on sales

Answer 18

net profit / turnover x100%

Question 19

what does net profit on sales show

Answer 19

its shows how efficiently the business is being managed

Question 20

what should you compare net profit on sales to

Answer 20

to the previous years %

Question 21

what should the % net profit on sales be

Answer 21

it should not be lower than 1/3 % of gross profit percentage

Question 22

what is a reason if % net profit on saleS IS LOW

Answer 22

EXPENSES ARE TOO HIGH

Question 23

if % net profit on sales decreased what would you recommend

Answer 23

?expenses must be better managed

?reduce the loan to decrease interest (pay off the loan as soon as possible)

Question 24

how do calculate percentage operating expenses on sales

Answer 24

operating expenses/ turnover x100%

Question 25

what does %operating expenses on salesbshow

Answer 25

it show the part of gross profit on sales that is used for operating expenses

Question 26

what do u compare percentage operating expenses on sales to

and wha whole the % be

Answer 26

compare to last year
it should be the same or decreased as last year

Question 27

if percentage operating expenses on sales is higher

what could be the reason

Answer 27

there was poor control over expenses

Question 28

what would you recommend if percentage operating expenses on sales is higher

Answer 28

should be control over costs.
advertising should be in relation to sales