Graeme is a sole trader selling electrical equipment from a chain of 10 retail shops.Shortly after Christmas, he compares his business's performance in December with that of the leading high street retailers.Recently published statistics show that the leading retailers made 26.2% gross profit and 9.8% net profit in the month. Graeme's opening inventory was £4 200 200 and closing inventory was £1 230 400.He purchased inventory valued at £17 206 300 during December and his revenue was £26 500 000.Expenses for the month were £4 018 400.
Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Graeme's gross profit margin is £26,500,000 - £17,206,300 - £1,230,400 + £4,200,200 = £12,263,500 / £26,500,000 * 100 = 46.3%. His net profit margin is £12,263,500 - £4,018,400 = £8,245,100 / £26,500,000 * 100 = 31.1%. Both of these are lower than the leading retailers' margins.

Graeme Is a Sole Trader Selling Electrical Equipment from a Chain