FPFM Financial Performance - AAT Sample Assessment 1 - Task 7b

eddzter1978

Hello All,

Please could someone help me calculate the Sales Revenue to the nearest £ from the following figures:

Net Assets - £175,000
Return on net assets % - 13
Profit margin % - 14
Gearing % - 32.75
Profit - £22,750
Sales revenue - ???

The answer is £162,500 but I cannot find out how to calculate it. I'm sure it is staring me in the face...

Thank you very much in advance.
Ed

crispy

Enjoying This

Profit / Profit Margin = Revenue

£ 22,750 / 0.14 = £ 162,500

eddzter1978

Brilliant! Thanks again!

aat_trainingcompany

Extension of the previous answer by crispy.

You can self-check. Profit margin just means how much of the revenue is converted into profit. Consequently, whatever answer you are getting for revenue multiple it by the 14% that should give you the profit, i.e. £22,750, if it doesn't you will know you have made a mistake somewhere.

Revenue(X) * margin (14%) = Profit(£22,750), x=(22,750/14%)