1. Gross profit margin = (gross profit / sales revenue) x 100
Ahmed GPM = () x 100 = 28.57 %
Flash GPM = () x100 = 25.00 %
Net profit margin = (net profit / capital employed) x 100
Ahmed NPM = (20 / (100+50+45)) x 100 = 10.26%
Flash NPM = (60 / (150+60+120)) x 100 = 18.18%
2. A higher gross profit margin is desirable for a firm. This because it indicates that the
company efficiently manages its costs of sales.
Ahmed has a slightly higher GPM than the Flash. Nonetheless, Flash had a much
higher NPM.
A higher net profit margin is desirable for a firm. This because it indicates that their
profit, regardless of their expenses, is profitable.
Ahmed GPM = () x 100 = 28.57 %
Flash GPM = () x100 = 25.00 %
Net profit margin = (net profit / capital employed) x 100
Ahmed NPM = (20 / (100+50+45)) x 100 = 10.26%
Flash NPM = (60 / (150+60+120)) x 100 = 18.18%
2. A higher gross profit margin is desirable for a firm. This because it indicates that the
company efficiently manages its costs of sales.
Ahmed has a slightly higher GPM than the Flash. Nonetheless, Flash had a much
higher NPM.
A higher net profit margin is desirable for a firm. This because it indicates that their
profit, regardless of their expenses, is profitable.
