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Theme 2 Business
Managing finance
Profit margins
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Increasing profit margins
Business a level > Theme 2 Business > Managing finance > Profit margins
1 card
Cards (9)
Gross Profit
Margin
(GPM)
Measures
gross profit
as a percentage of
revenue
Calculating Gross Profit Margin
Gross Profit
/ Revenue x
100
Improving GPM
Increasing
prices
or
reducing
the direct cost of
sales
Calculating Operating Profit Margin
Operating
Profit /
Revenue
x
100
Improving OPM
Increasing
prices
or
reducing
the cost of sales or
operating
expenses
Profit for the Year (Net Profit) Margin
Measures the
profit
for the
year
as a percentage of revenue
Calculating Profit for the Year Margin
Profit for the
Year
/
Revenue
x
100
Profit for the Year
Margin
Takes into account most
expenses
(apart from tax) so gives the best overall impression of how
profitable
a business is
A high profit for the year margin is attractive to
shareholders
, because it can indicate that they may receive high
dividends
See all 9 cards