Accounting Principles V11

Clive W. Humphris

RATIO ANALYSIS: Mark-up and Margin. 

The selling price of a product is made up of the cost to produce added to which is an amount for profit.

Profit may be shown two ways, as a mark-up or a profit margin, the first is based on the cost price the second on the selling price.

Both mark-up and profit can be expressed as a fraction or percentage, the latter being more common.

Mark-ups and margins can be used to make a comparison of the value of the product to the business, using the one that gives the largest percentage would be the preferred option when selling business.

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