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Business Level 3, Unit 2/ M3/ Examined and Passed
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Business Level 3, Unit 2/ M3/ Examined and Passed
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By: TamzG • 6 year ago
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ProfitabilityFirst of the ratio’s to be measured is the profitability (gross profit percentage of sales) based on the
numbers I got for Sales and Gross Profit I will calculate the % of sales. The results of this outcome will
give answer if the company is doing well in terms of selling if the % is low it will mean that the
company is doing poorly if the percentage will be high it will mean success for the company. Also I
will be measuring things such as net profit percentage and the ROCE (Return on capital employed)
by calculating all these there will be a clean view how does the company doing.
Gross profit margin
2,170,000 X 100 = 81% Gross Profit
2,670,000 Sales Revenue
The final result of this measure is 81%, this is a great result for Monsoon business as the percentage
is very high so this mean the percentage sales is very satisfying for the owners. Also this mean the
company is doing very well by having a good percent of sales.
Net profit margin
1,727,300 X 100 = 64% Net Profit
2,670,000 Sales Revenue
The final result of measurement for net profit margin is 64% which is a great result for the company
as this mean the company net profit is likely to be very high and this mean the business is successful
and doing well. As long the percentage is above certain number then the company can feel secured
and comfortable.
Return on capital employed
1,727,300 X 100 = 171% Net Profit
1,006,800 Capital Employed
The final result shows that the return on capital employed is 171% this means there is full return plus
71% of profit. This result is great for the company as it shows that the % return that investor received
in the capital the invested is really high so it will motivate them to make the business even better.
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