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SingaporeAccountingQuick questions

Financial Statement Analysis and Ratios

Quick questions on Profitability ratios explained: O-Level Principles of Accounts

5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.

What is gross profit margin?
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This shows the profit made on trading, before other expenses, as a percentage of sales:
What is profit margin?
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This shows the final profit, after all expenses, as a percentage of sales:
What is q1?
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Sales are \50,000andgrossprofitis and gross profit is \20,00020,000. State the gross profit margin. [2 marks]
What is q2?
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Profit for the year is \24,000andcapitalis and capital is \120,000120,000. State the return on capital employed. [2 marks]
What is q3?
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The gross margin is steady but the profit margin has fallen. State the likely cause. [1 mark]

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