# Profit Margins and Mark Ups

Registered Posts: 3
If I am given a inventory sales price and a sales percentage margin only, how can I find the cost price of the inventory?

e.g: inventory at selling prices is £240000

Sales Margin is £144000

what is the cost price of the inventory for the shops financial statements?

I know this is probably basic mathematic formulas but can anyone tell me what that formula is?

Thanks

• Registered Posts: 3
Sales margin is 40% not 144000
• Registered, Tutor Posts: 243 Dedicated contributor 🌟 🐵 🌟
This question is really about percentages, although you do need to know that
Selling price = Cost price + profit

If the sales margin is 60%, this means that the profit is 60% of the selling price.
The other 40% of the selling price is the cost.

The selling price of the inventory is £240,000
40% of this is £144,000 so that is the cost
• Registered Posts: 3
This is what I came to it just seemed quite a large margin, but that clarifies the method I am using is correct.

Many thanks
• Registered, Tutor Posts: 243 Dedicated contributor 🌟 🐵 🌟
You're welcome