Calculating Markup

by Uma
(Delaware, USA)

Please explain more about markup. Preferably with examples. I don't understand how to calculate the markup using price and margin.


Answer:

Dee Reavis

Okay, here is an example: You can buy a widget for $15. You have no trouble selling it for $20. Your margin or gross profit is $5, which is the difference between the sales price and the purchase cost. Cost markup is $5/$15 = .33 or 33%. Sales price markup is $5/$20 = .25 or 25%. If you are still confused by this just use the Margin and Markup Calculator.

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What Business Ratios Are Important To Calculate?

by Dora
(Gilbert, Arizona)

I want to know what ratios a Business Analyst should compute to find the businesses productivity and ROI.

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Feb 11, 2010
 Key Business Ratios
by: Dee Reavis

Here are some key business ratios that can help to evaluate the health of a company.

Current Ratio
This ratio is the current assets divided by the current liabilities. It gives an indication of whether a company is likely able to pay its debts.

Quick Ratio
When you total a companies cash, marketable securities and its accounts receivable and divide the total by its current liabilities you get the current ratio. This is another measure of how well a company can pay its debts. If this ratio is at least 1 the company is in good shape. Even higher is better

Debt To Equity
Debt is a 2 edged sword. When business is booming, debt makes a company grow faster. That is called leverage. When business is bad, big chunks to the company's capital can go to paying debt. The dept to equity ratio gives a measure of where that a company is at in that leverage to risk spectrum.

Sales To Inventory
This one measure how fast inventory is turning over. If this ratio is 4, then it means that sales equals the amount invested in inventory times 4.

Profit Margin
Profit margin is the ratio of the profit received for a product divided by the revenue from that product expressed as a percentage. A company has less risk if its profit margin is high.

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Gross Margin Mark Up

by Donnah
(Ocala, FL)

How much should I mark up a product (course of study) if I want to achieve a 90% gross margin?

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Mar 24, 2010
 Gross Margin Mark Up
by: Dee Reavis

The formula for calculation is:

Gross Margin Percentage = 
               (Revenue-Cost of Product)/Revenue

So to achieve 90% GMP then:
(Revenue - Cost of Product) = 
              .9 x Revenue or

.1 x Revenue = Cost of Product

Revenue = 10 x Cost of Product

The markup would have to be 900%.

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Margin Example

by Olu's Margriet
(Ila Orangun Osun State,nigerial)

Explain and show how margin works.


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Apr 23, 2010
 Margin Example
by: Dee Reavis

There are 2 ways that you might want to use margin in a business: gross margin and profit margin.

1. Gross Margin: Gross margin is the difference between the sales price of an item you are selling and its cost to you.

Suppose you are making a dress to sell. The cost for materials and labor to make the dress is $15.00. You sell the dress for $25.00. The gross margin is $10.00. In terms of percent it is ((25-15)/25)x100 or 40%.

2. Profit Margin: Profit margin is similar, but usually applied on broader level. It is net income divided by net sales.

If your clothes making business has an income after costs of $15,000 for total sales of $50,000, then your profit margin is (15,000/50,000)x100 or 30%.

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Calculate Percentages

by DAVID
(VIRGINIA)

75% OF WHAT NUMBER IS 96?

Answer

This is easily calculated by dividing .75 into 96.

96/.75=128

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Calculate Percentage

Let's say that I'm taking a test, and the test has 24 questions. I end up getting 5 wrong. What percentage of the test did I get right?

Answer

This is how to calculate percentage:

(24-5)/24=.79 or 79%

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