A company reports a profit margin of 30%. If the total revenue is $500,000, what
Practice Questions
Q1
A company reports a profit margin of 30%. If the total revenue is $500,000, what is the profit amount? (2023)
$150,000
$200,000
$100,000
$250,000
Questions & Step-by-Step Solutions
A company reports a profit margin of 30%. If the total revenue is $500,000, what is the profit amount? (2023)
Step 1: Understand what profit margin means. A profit margin of 30% means that 30% of the total revenue is profit.
Step 2: Identify the total revenue amount. In this case, the total revenue is $500,000.
Step 3: Convert the profit margin percentage into a decimal. To do this, divide 30 by 100, which gives you 0.3.
Step 4: Calculate the profit amount by multiplying the total revenue by the decimal profit margin. So, you do 0.3 * 500,000.
Step 5: Perform the multiplication. 0.3 * 500,000 equals $150,000.
Step 6: Conclude that the profit amount is $150,000.
Profit Margin – The profit margin is a financial metric that shows the percentage of revenue that exceeds the costs of goods sold (COGS). It is calculated by dividing profit by total revenue.
Revenue Calculation – Understanding how to calculate profit from total revenue using the profit margin percentage.
