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The following information is available from the final accounts of Navona Ltd: Sales €420,000 Gross Profit €84,000 Net Profit €31,500 Calculate: i) Gross Profit Margin Answer: _______ % ii) Net Profit Margin Answer: _______ % - Leaving Cert Business - Question 5 - 2012

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Question 5

The-following-information-is-available-from-the-final-accounts-of-Navona-Ltd:--Sales--€420,000-Gross-Profit--€84,000-Net-Profit--€31,500--Calculate:--i)-Gross-Profit-Margin-Answer:--_______-%--ii)-Net-Profit-Margin-Answer:--_______-%-Leaving Cert Business-Question 5-2012.png

The following information is available from the final accounts of Navona Ltd: Sales €420,000 Gross Profit €84,000 Net Profit €31,500 Calculate: i) Gross Profit... show full transcript

Worked Solution & Example Answer:The following information is available from the final accounts of Navona Ltd: Sales €420,000 Gross Profit €84,000 Net Profit €31,500 Calculate: i) Gross Profit Margin Answer: _______ % ii) Net Profit Margin Answer: _______ % - Leaving Cert Business - Question 5 - 2012

Step 1

Gross Profit Margin

96%

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Answer

To calculate the Gross Profit Margin, use the formula:

extGrossProfitMargin=(Gross ProfitSales)×100 ext{Gross Profit Margin} = \left( \frac{\text{Gross Profit}}{\text{Sales}} \right) \times 100

Substituting the given values:

Gross Profit Margin=(84,000420,000)×100=20%\text{Gross Profit Margin} = \left( \frac{84,000}{420,000} \right) \times 100 = 20\%

Step 2

Net Profit Margin

99%

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Answer

To calculate the Net Profit Margin, use the following formula:

Net Profit Margin=(Net ProfitSales)×100\text{Net Profit Margin} = \left( \frac{\text{Net Profit}}{\text{Sales}} \right) \times 100

Substituting the given values:

Net Profit Margin=(31,500420,000)×100=7.5%\text{Net Profit Margin} = \left( \frac{31,500}{420,000} \right) \times 100 = 7.5\%

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