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Accounting problem

  1. #1
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    Accounting problem

    More of a accountng problem but if my turnover is 84000 and my profit from this 15500 is my percentage of profit 18.45%.

    Or do I need to take the profit away from the turnover first then work out the percentage of profit. Im a little confused in this.

  2. #2
    Forum Moderator 6StringJazzer's Avatar
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    Re: Accounting problem

    There are two figures that you care about related to profit. The first one is what you correctly showed above, and probably the one you want. Each is used for different purposes. It depends on what your purpose is.

    Margin: Profit as a percentage of sales
    (Sales - Cost)/Sales = Profit/Sales
    In your example it is 15,500/84,000 = 18.45%

    Markup: Profit as a percentage of cost
    (Sales - Cost)/Cost = Profit/Cost
    In your example it is 15,500/68,500 = 22.63%
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