Introduction to Accounting Ratios

The gross profit margin earned on an item which cost £500 and is sold for £625 is:

• 20%

• 25%

• 33 1/3%

• None of the above.

The mark-up on an item which cost £500 and is sold for £625 is:

• 20%

• 25%

• 33 1/3%

• None of the above.

The gross profit margin earned by a shopkeeper who sells all goods at 25% above their cost is:

• 20%

• 30%

• 33 1/3 %

• 35%

A firm's gross profit margin is 20%. Its mark-up on cost is:

• 16%

• 22%

• 25%

• 30%

A firm's cost of sales for a particular accounting period was £16,000. During the period, it earned a gross profit margin of 20% on all goods sold. The firm's sales for the accounting period were:

• £13,600

• £20,160

• £21,000

• None of the above.

The following information relates to a retail business whose financial year ends on 31 December.

The firm's stock at 31 December, at cost, was:

• £4,300

• £16,300

• £36,300

• None of the above.

The following information relates to a sole trader whose financial year ends on 31 December.

The sole trader's stock at 31 December, at cost, was:

• £20,000

• £26,000

• £40,000

• £70,000

A business' rate of stock turnover during any given accounting period is calculated as . . .

• the business' sales for that period divided by the value of its stock at the beginning of the period.

• the business' sales for that period divided by the value of its stock at the end of the period.

• the business' purchases for that period divided by the value of its stock at the end of the period.

• the business' cost of sales for that period divided by the average of the business' stock during the period (the average being the sum of its stock at the beginning of

  the period and its stock at the end of the period divided by two).