For the financial year ended 31 January 2020, Zainab Limited reported sales of £650,000 and a gross profit of £260,000. Selling and distribution costs totalled up to £54,000 and administration expenses incurred came to £76,000. Finance expense was £7,500 and finance income received was £2,500. The company incurred an irrecoverable debt of £10,000 and the tax charge on the profit for the year was £23,000. What is Zainab Limited's operating profit % for the year ended 31 January 2020?

Question

Quizplus · Accepted Answer

Operating profit is calculated as gross profit minus operating expenses (selling and distribution costs, administration expenses, and irrecoverable debt). Operating profit = £260,000 - (£54,000 + £76,000 + £10,000) = £120,000. Operating profit percentage = (£120,000 / £650,000) * 100 = 18.46%.

For the Financial Year Ended 31 January 2020, Zainab Limited