Correct Profit Margin (%)

  • Thread starter Thread starter LJG
  • Start date Start date
L

LJG

Hi Guys,

This might be a really dumb question, but can anyone advise the correct way
to calculate profit margin %

I have [margin]/[cost]

i.e £4.19/6.98 = 60% (no decimals required)

Or should it be [margin]/[rrp]

i.e. £4.19/£11.17 = 38%

Any suggestions would be appreciated.

TIA
 
Don't feel dumb over this, I've seen people with years of experience in
business getting it wrong! To begin with, change [margin] in your
formulae to [profit], so they make sense (the term to be defined cannot
be part of the definition). So:

Margin = [profit]/[rrp]
Mark-up = [profit]/[cost]

HTH,
Nikos
 
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