Page 223 - Microsoft Word - 00 - Prelims.docx
P. 223
Interpretation of financial statements
4.2 Gross profit margin
On a unit basis the gross profit represents the difference between the unit sales price
and the direct cost per unit. The margin works this out on an average basis across all
sales for the year.
The gross profit margin is calculated as follows:
Gross profit
× 100%
Sales revenue
Tutor notes guidance – discussion points
Discuss with students possible explanations for changes in the gross profit
margin.
217
