Free practice · single-choice · medium
Practice
Interpret gross profit carefully
What can a positive gross profit for a fictional order establish by itself?
Profitability bridge
Trace quantities through revenue, cost, profit, and ratio
- Revenue
- Units × selling price
- Direct cost
- Units × defined direct unit cost
- Gross profit
- Revenue − direct cost
- Margin
- Gross profit ÷ revenue
- Markup
- Gross profit ÷ cost
Margin and markup use the same profit numerator but different denominators. Keeping that bridge visible prevents a plausible but mislabeled percentage.