3287562
Description
Mind Map by siobhanlasposa, updated more than 1 year ago
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Created by siobhanlasposa
over 9 years ago
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Mark-up Ratios
- How is it calculated ?
- Gross profit x 100 * Cost of goods sold
- Gross profit x 100 * Cost of goods sold
- When is it satisfactory ?
- Mark-up ratio should be high enough to
generate a profit and cover business
expenses, and low enough to ensure
maximum customer sales
- Mark-up ratio should be high enough to
generate a profit and cover business
expenses, and low enough to ensure
maximum customer sales
- What does it mean ?
- Mark-up percentage or ratio is the
percentage added to the cost to the selling
price in order to make a greater profit
- Mark-up percentage or ratio is the
percentage added to the cost to the selling
price in order to make a greater profit
- When is it un-satisfactory ?
- 1. It is unsatisfactory when it is to
low and is not able to cover
business expenses or generate a
profit
- 2. Mark-up ratio is un-satisfactory when it
is to high and customers are not willing to
pay for goods
- 2. Mark-up ratio is un-satisfactory when it
is to high and customers are not willing to
pay for goods
- 1. It is unsatisfactory when it is to
low and is not able to cover
business expenses or generate a
profit
- What could you compare this to ?
- 1. Compare to previous accounting
records in different periods to see other
expenses and profits
- 2. Compare it to other businesses
that are similar to your own
- 2. Compare it to other businesses
that are similar to your own
- 1. Compare to previous accounting
records in different periods to see other
expenses and profits
- How can the ratio be improved ?
- 1. Mark-up selling price of goods
- 2. Find a cheaper supplier
- 2. Find a cheaper supplier
- 1. Mark-up selling price of goods
- When will it be worse ?
- 1. If the mark-up ratio is to high and customers will not be
wiling or able to pay for goods or services and therefore
the business will not generate enough profit or income to
cover business expenses
- 2. If the mark-up is to low it will not cover business expenses
and they will be working with a deficit rather than a surplus
- 2. If the mark-up is to low it will not cover business expenses
and they will be working with a deficit rather than a surplus
- 1. If the mark-up ratio is to high and customers will not be
wiling or able to pay for goods or services and therefore
the business will not generate enough profit or income to
cover business expenses
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