Bathsheba's net profit margin in 20X4 was 6.3% and her gross profit margin was 28.6%.Closing inventory was 108% of opening inventory and her purchases totalled £155 400.Opening inventory was £13 200. What was Bathsheba's revenue figure for 20X4 (to the nearest £)?

Question

Quizplus · Accepted Answer

Step 1: Calculate the Cost of Goods Sold (COGS)
Opening Inventory = £13,200
Closing Inventory = 108% of Opening Inventory = 108/100 x £13,200 = £14,256
Average Inventory = (Opening Inventory + Closing Inventory) / 2 = (£13,200 + £14,256) / 2 = £13,728

COGS = Opening Inventory + Purchases - Closing Inventory
COGS = £13,200 + £155,400 - £14,256 = £154,344

Step 2: Calculate the Revenue
Gross Profit Margin = Gross Profit / Revenue x 100%
28.6% = Gross Profit / Revenue x 100%
Gross Profit = 28.6/100 x Revenue
Gross Profit = 0.286R

Net Profit Margin = Net Profit / Revenue x 100%
6.3% = Net Profit / Revenue x 100%
Net Profit = 0.063R

Net Profit = Gross Profit - Expenses
0.063R = 0.286R - Expenses
Expenses = 0.286R - 0.063R
Expenses = 0.223R

COGS = Revenue - Gross Profit
£154,344 = Revenue - 0.286R
Revenue = £154,344 / 0.286
Revenue = £539,580

Revenue - Expenses = Net Profit
£539,580 - 0.223R = 0.063R
£539,580 = 0.286R
R = £1,888,112

Therefore, the revenue figure for 20X4 is £216,168 (nearest £).

Bathsheba's Net Profit Margin in 20X4 Was 6