Profit Margins - Help please

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
Hi hope someone can help - am just going through the budget and my head is fried...

I know my total costs are going to be approx £294,500 for next year, in order to hit a required profit to turnover return of 30% of sales what formula will I need to work out my required turnover target?

Hope thats clear...

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Profit Margins - Help please

    So the situation you've got is:

    Costs + Profit = Turnover

    Since you know that profit is 30% of Turnover, Costs must be 70% of turnover.

    To change the Costs to Turnover, divide them by 70% (as in 0.7).

    In this case, £295,400 ÷ 0.7 = £422,000

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Profit Margins - Help please

    Thx - I knew it was pretty simple - just had mental block :lol:

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