What Ratio Means : It Is The Percentage Of Gross Profit Essay

1463 Words Oct 2nd, 2015 6 Pages
What the ratio means: It is the percentage of gross profit over the total revenue or sales for the respective year.
Application to the company: We notice that the Gross profit percentage decreased over the two years from 47.81% to 46, 49% and we could base this on the fact that their revenue increased by a large proportion whilst also their Cost of Sales incurred went up by a significant proportion as well, but not as much as their increase in Sales between both years. As a result this has led to a decrease in the Gross Profit percentage for 2014 from 2013.
Ratio 2- Profit Percentage or Net Profit Margin
Profit Percentage or Net Profit Margin 2013: 18, 20% Profit Percentage or Net Profit Margin 2014: 16, 96% Decreased from 2013to 2014
What the ratio means: It is the percentage of profit attributable to ordinary shareholders over the total revenue or sales for the respective year.
Application to the company: We notice that the Net Profit Margin has decreased over the two years from 18, 20% to 16, 96% and we could base this on the fact that their revenue had increased by a large proportion over the two years but likewise their Cost of sales had also increased at a high margin which effectively resulted in their Profit attributable to their shareholders being higher in 2014 than 2013 but by a…

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