CAIE IGCSE Business Studies 7.3.6 gross profit margin

Practise gross-profit-margin questions by dividing gross profit by revenue, multiplying by 100 and giving a percentage answer.

Exam points

Use gross profit divided by revenue multiplied by 100 to find the margin.
Show substitution such as 3330÷7400×100 or 12000÷20000×100 before calculating.
Give the final answer as a percentage and avoid leaving the answer as 0.45.

[Maximum number: 2]

D2G is a driving school. Mattan started D2G 3 years ago to teach people to drive a car. As the business has been successful Mattan plans to buy a new vehicle. He has been analysing D2G's income statement. An extract is shown in Table 3.1. Mattan wants to understand the difference between profit and cash. He also wants to know how an increase in competition and changes in the business cycle might affect D2G.

Table 3.1

Calculate D2G's gross profit margin. Show your working.

Award 2 marks for a correct final answer. Award 1 mark for a correct method with an incorrect answer.

Method and substitution:
$\text{gross profit margin}=\frac{\text{gross profit}}{\text{revenue}}\times100 =\frac{12\,000}{20\,000}\times100$

Final answer:
$\boxed{60\%}$

Award 2 marks for the correct final answer without working. Award only 1 mark if 60% appears in working but is not presented as the final answer. The percent sign is required for the second mark.

All question bank results loaded

7.3.6—Gross profit margin question 1