Financial Reporting and Analyis - Reading 21, Example 5, Question 5 Asks you to calcuate gross profit margin for 2008. It should be simple. gross profit margin = gross profit/total revenue The solution uses: gross profit margin = gross income/net sales How do you know which formula to use? It was not defined. What’s the best formula to use for the exam if not defined?
dude, seriously?
It looks gross income is gross profit and total revenue is net sales in this question. They just call them different names, but look at the line items in the question, they mean exactly the same things as gross profit and revenue.
Ratios and corresponding formulas are given on pages 3&4 of FR&A