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

eddzter1978
eddzter1978 Registered Posts: 6
in AAT Level 4 (Level 8 in Scotland)
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

Comments

  • crispy
    crispy Registered Posts: 468 Dedicated contributor 🦉
    Enjoying This :)

    Profit / Profit Margin = Revenue

    £ 22,750 / 0.14 = £ 162,500
  • eddzter1978
    eddzter1978 Registered Posts: 6
    Brilliant! Thanks again!
  • aat_trainingcompany
    aat_trainingcompany Registered Posts: 20
    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%)
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    info@aat-trainingcompany.co.uk

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