Question

THIS AREA DO NOT WRITE IN THIS AREA Shedz is a business that sells garden sheds and other wooden buildings. The sheds are sold online and they are delivered to customers using the company's vehicles. The owner, Clare, has given you some information about the financial performance of the business. She has asked you to analyse this information using ratio analysis. Extract of Financial Information for Shedz Cost of sales Gross profit Expenses Capital employed Opening inventory Closing inventory 10 (a) Calculate the gross profit margin ratio. £ 195 000 65 000 13 000 416 000 42 000 36 000 (3)​

Answer 1

The gross profit margin ratio for Shedz is 33.33%.

Step-by-step explanation:

The gross profit margin ratio can be calculated using the formula:

Gross Profit Margin Ratio = (Gross Profit / Revenue) x 100

In the case of Shedz, the gross profit is £65,000 and the revenue (which is the same as the cost of sales) is £195,000. Plugging these values into the formula:

Gross Profit Margin Ratio = (65,000 / 195,000) x 100 = 33.33%

Therefore, the gross profit margin ratio for Shedz is 33.33%.