Question

1. In this question you need to complete the below calculations and find out the most and least profitable company out of 5 mentioned below. Bring an example and calculate the EBIDTA for the most profitable company:

1. How much is the margin (in number and %) if the sale price = $25 and cost = $5
2. How much is the mark up (in number and %) if the sale price = $50 and cost = $10
3. How much is the margin (in number and %) if the sale price = $72 and mark up 44%
4. How much shall the product be sold if the cost = $94 and margin = 35%
5. If you know that the cost = $45 and markup = $65, please find margin in %

Answer 1

Solution:

Margin = (Sales price - cost)/sales ; markup = (sales price - cost)/cost

So,

a) Margin = (25 - 5)/25 = 0.8 or 80%

b) Markup = (50 - 10)/10 = 4 or 400%

c) Markup can also be written as: sales price/cost - 1, so, with markup of 44%, we have

0.44 = sales/cost - 1

sales/cost = 1.44

So, margin = 1 - cost/sales = 1 - 1/1.44 = 0.30556 or 30.556%

d) Margin = 1 - cost/sale price

So, 0.35 = 1 - 94/sale price

sale price = 94/(1 - 0.35) = $144.615

e) Sales price = cost*(1 + markup) = 45*(1 + 0.65) = 74.25

So, margin = (74.25 - 45)/74.25 = 0.3939 or 39.39%