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Slide 1

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Business Ratios
Which ones should I know?…read more

Slide 2

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For Answers, go to next slide after questions.
Click the to get back to the contents page.
· Gross Profit Margin Questions
· Net Profit Margin Questions
· Return on Capital Questions
· Liabilities Assets
· Current Ratio Questions
· Acid Test Ratio Questions
General Advice…read more

Slide 3

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· My personal advice to you is to learn these not by
the equation but by the wording. So that when you
see a question that asks for a gross profit margin
for example, you can know what those terms mean
and then apply some common sense to know how
to get the answer.
· Practice, Practice, Practice. Keep doing questions,
make sure you get them right and come up with
your own to double check.…read more

Slide 4

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Gross Profit Margin
· Gross profit is the amount a company makes without costs
such as VAT, electricity etc. taken off.
· Gross Profit Margin means how much profit they have
made in a % of the amount they have made from sales of
the product. Therefore:
Gross Profit Margin = Gross Profit
If Gross Profit is £5,000 and Sales is £20,000
Then Gross Profit Margin is 25% (5,000/20,000)
The higher the better.…read more

Slide 5

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Gross Profit Margin Questions
· Cleverclogs has a turnover of £120,000, the
cost of making the product is only £20,000,
what's the Gross Profit Margin?
· Brighter Gardens has made sales worth
£550,000 via selling 55 gardens. Each
garden costs them 5,000 to make and install.
What is the Gross Profit Margin?…read more

Slide 6

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Gross Profit Margin Answers
· 1) 120,000(S) - 20,000 = 100,000(GP)
· 100,000/120,000 = 0.83 = 83%
· 2) 55*5,000 = 55,000
· 550,000(S)-55,000 = 495,000 (GP)
· 495,000/550,000 = 0.9 = 90%
S = Sales
GP = Gross Profi…read more

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There is a mistake on a 7th page of this document. Its not Gross Profit Margin, it is Net Profit Margin. 

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