Pearson Edexcel IGCSE · Commerce

Measuring commercial performance: Practice Questions

3 multiple-choice questions marked as you go, and 3 written questions with worked solutions. All on Measuring commercial performance.

6 questions17 marksFree, no account

Question 1

1 mark

What does a falling Return on Capital Employed (ROCE) indicate to investors?

Question 2

1 mark

Business A and Business B both have a gross profit margin of $40\%$. However, Business A has expenses as a percentage of turnover at $15\%$, while Business B has expenses at $25\%$. Which statement is true regarding their net profit margin?

Question 3

1 mark

Which formula correctly calculates the Gross Profit Margin of a business?

Question 4

5 marks

Business X has sales of $ \$200,000 $ and a gross profit of $ \$80,000 $. Business Y has sales of $ \$500,000 $ and a gross profit of $ \$150,000 $. Determine which business has a higher gross profit margin.

Write your answer out first, then check it against the worked solution.

Question 5

4 marks

A boutique retail store provides the following financial figures at the end of the trading year:
• Sales Turnover: $\$\text{240,000}$
• Cost of Goods Sold: $\$\text{144,000}$
• Operating Expenses: $\$\text{60,000}$

(a) Calculate the store's Gross Profit Margin.
(b) Calculate the store's Expenses as a percentage of turnover.

Write your answer out first, then check it against the worked solution.

Question 6

5 marks

A hardware merchant had the following results for the past year:
• Sales Turnover: $\$\text{600,000}$
• Cost of Goods Sold: $\$\text{420,000}$
• Operating Expenses: $\$\text{108,000}$
• Capital Employed: $\$\text{360,000}$

(a) Calculate the Profit for the year (net profit) margin.
(b) Calculate the Return on Capital Employed (ROCE).
(c) Explain one way the merchant could improve the Return on Capital Employed without altering the capital employed.

Write your answer out first, then check it against the worked solution.

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