Good Morning,

I will get straight to the point.

I was recently at an inteview and was asked about Profit Margins.

I was asked that if I was to buy something at £10 and want to sell it at 46% Profit Margin what would I sell it at?

I answerd £14.60 assuming this would be correct, However the answer was £15.40.

The only solution I came up with that he could have used was
£10 x 200% - £10 x 46% which seems a silly way of doing things, why not just £10 x 54%?

Can anyone tell me how to calculate this properly? and how to calculate Profit Margins in this fashion? I have a 2nd interview next week and don't want to make the same mistake twice.

Thanks for the floods of responses ;-).

I have since learnt that the interviewer was wrong with his answer of £15.40.

The actual answer should be £18.52. Took me a few hours of surfing the web but managed to find enough sites to ensure I was correct.

Based on:

£10.00 / 0.54 = £18.52
£8.52 / £18.52 x 100 = 46%

5% divide by 0.95
10% divide by 0.9
15% divide by 0.85
20% divide by 0.8
25% divide by 0.75
30% divide by 0.7
35% divide by 0.65
40% divide by 0.6
45% divide by 0.55
50% divide by 0.5 .......... And so on.

Can anyone confirm this is correct?


Thankfully my incorrect answer didn't affect things too much, I have been called back for a 2nd interview so I can bring this up with him.

Firstly CONGRATULATIONS! for getting through to the second interview.

It is a really common mistake, mixing up Margin with Mark Up.

Here are my calculations:

Selling Price =

Cost Price
1 – Margin%

Example =

£10
1 – 46%


£10 = £18.52
.54

So you are right.

My advice would be not to bring this up at the interview though.

Cheers WBD2009, Nice to know I am on the right tracks.

When they rang to ask me back for a 2nd Interview they did ask that I looked into the Profit Margins stuff, But I will take your advice and only bring it up if they mention.

Ill let you know how it goes

No, tell them!

If they are so incompetent as to ask interviewees questions they themselves are getting wrong, it doesn't bode well for them!

Even still, I would have answered £14.60 as well, as that number is 46% higher than £10. Maybe I still have things to learn, such as the distinct between profit margin and profit.

Hi Guys,

Quick update, Got offered the Job, Think i'll take them up on the offer.

Thanks for the advice/info.

Lee

NICE ONE! Well done you.

Had a quick look and this link is not "the ultimate suggestion". In fact it adds no value to this thread.

Also noticed the same link in other threads, again it adds no value.

bxtechno please stop spamming the forum with unrelated links.

I would have answer £14.60 too - we learn something everyday! Thanks