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BTEC Business Level 3 Unit 2 P7, M3, D2
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BTEC Business Level 3 Unit 2 P7, M3, D2
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BTEC Level 3 Unit 12 BTEC Book 1 Name: Daniil ChernatUnit title: Unit 2 Assignment title: Business resources
P7 M3
Ratio Explanation & Results for your business
Calculation interpreted and the efectiieness
of each ratio analyzed
Gross Profit Percentage Gross profit – Profitability ratio.
[Gross Profit/ Turnover (Sales) x 100] Definition – Shows how much gross profit is made
for £1 of sales.
542,000/850,000 x 100 = 63.76%
Analysis – The higher the better and it is expressed
as a percentage. This is not a bad gross profit
percentage. However, I have nothing to compare it
with, as there are no figures from last year or from
another business in the same industry.
Net Profit Percentage Net profit – Profitability ratio.
(Net Profit/ Turnover (Sales) x 100) Definition – Shows how much net profit is made for
every £1 of sales.
70,650/850,000 x 100 = 8.3%
Analysis – If gross profit margin is high but net
profit margin is low, it shows that expenses are too
high. In this case, there is a large difference
between gross profit and net profit.
Return on Capital Employed Capital employed – Profitability ratio.
(Net Profit before Interest and Tax/Capital Definition – Shows the % return a business is
Employed x 100) achieving from the capital (money) being used to
generate that return.
70,650/120,500 x 100 = 58.63%
Analysis – Should be higher than interest rate on
saving being offered by bank or building society
and the figure is expressed as percentage. ROCE
for the café is 58.63% which is much higher than a
bank interest. Therefore, the owner of the
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