A company reports sales of Rs. 2,000,000 and cost of goods sold of Rs. 1,200,000. What is its gross profit margin?
Correct answer: B. 40%
- A. 30%
- B. 40%
- C. 50%
- D. 60%
Explanation
Gross profit is Rs. 800,000, calculated as sales minus cost of goods sold. Dividing Rs. 800,000 by Rs. 2,000,000 gives a gross profit margin of 40%.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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