A clothing shop has revenue of £200,000 and net profit of £30,000. What is its net profit margin?

The clothing shop's net profit margin is 15%. The calculation is £30,000 ÷ £200,000 × 100 = 15%.

A restaurant has revenue of £500,000, cost of sales of £200,000 and expenses of £250,000. What are its gross and net profit margins?

The restaurant's gross profit margin is 60% and its net profit margin is 10%. Gross profit is £300,000 and net profit is £50,000.

A business wants a 20% net profit margin on revenue of £150,000. How much net profit does it need?

The business needs a net profit of £30,000. The calculation is 20% × £150,000 = £30,000.

AQA GCSE Business 8132

Business in the Real World

Topic overview What a business is and why people start one Goods, services, needs, wants and factors of production Business sectors, entrepreneurs and a changing business environment Sole traders, partnerships, limited companies and not-for-profit organisations Business aims and objectives Why business objectives differ and change Stakeholders and their influence on businesses Factors affecting business location Business planning and basic financial terms Expanding a business and economies of scale

Influences on Business

Topic overview E-commerce and digital communication Ethics, the environment and sustainability Interest rates, employment and consumer spending Globalisation and exchange rates Employment, health and safety and consumer law Competition, risk and uncertainty

Business Operations

Topic overview Job, flow and lean production Managing stock: just in time and just in case Suppliers, procurement, logistics and supply chains Quality control, quality assurance and TQM Customer service and the sales process

Human Resources

Topic overview Organisational structures, span of control and delegation Recruitment, selection and contracts of employment Financial and non-financial methods of motivation Induction, on-the-job and off-the-job training

Marketing

Topic overview Identifying and satisfying customer needs Market segmentation Purpose of market research and primary and secondary research Market research methods and interpreting findings Pricing methods and factors affecting price New products, USP, brand image and the Boston Matrix Product life cycle and extension strategies Promotional methods and the promotional mix Channels of distribution, e-commerce and m-commerce The integrated marketing mix

Finance

Topic overview Sources of finance Cash flow and cash flow forecasts Financial calculations and average rate of return Break-even charts and margin of safety Income statements and statements of financial position Profit margins and judging financial performance

Finance

Profit margins and judging financial performance

3 things to know
Paper 2

Overview

Gross and net profit margins calculated for a clothing shop and a restaurant, what falling margins reveal, comparing with past years and rivals, and how shareholders, banks and suppliers read the accounts.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What is gross profit margin, and how is it calculated?

Key term

A clothing shop has revenue of £200,000 and gross profit of £80,000. What is its gross profit margin?

Key term

What is net profit margin, and how is it calculated?

Questions from this subtopic

Each one with the model answer underneath.

1
What is gross profit margin, and how is it calculated?
Model answer
Gross profit margin is gross profit as a percentage of revenue. The formula is gross profit ÷ revenue × 100.
2
A clothing shop has revenue of £200,000 and gross profit of £80,000. What is its gross profit margin?
Model answer
The clothing shop's gross profit margin is 40%. The calculation is £80,000 ÷ £200,000 × 100 = 40%.
3
What is net profit margin, and how is it calculated?
Model answer
Net profit margin is net profit as a percentage of revenue. The formula is net profit ÷ revenue × 100.
4
A clothing shop has revenue of £200,000 and net profit of £30,000. What is its net profit margin?
Model answer
The clothing shop's net profit margin is 15%. The calculation is £30,000 ÷ £200,000 × 100 = 15%.
5
A restaurant has revenue of £500,000, cost of sales of £200,000 and expenses of £250,000. What are its gross and net profit margins?
Model answer
The restaurant's gross profit margin is 60% and its net profit margin is 10%. Gross profit is £300,000 and net profit is £50,000.
6
A business wants a 20% net profit margin on revenue of £150,000. How much net profit does it need?
Model answer
The business needs a net profit of £30,000. The calculation is 20% × £150,000 = £30,000.

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Business in the Real World

Influences on Business

Business Operations

Human Resources

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