Figured this out: Need to read more carefully.
Hello All,
I am a PhD outside of the business field so maybe I am missing something. I was doing some of the practice questions on this site and came across a question that I belive is incorrect. The question is: If the profit margin of the company in 2013 was 15%, what was the total revenue in the period?
In case the attached image does not post the total costs of the company in 2013 was $544 million and the solution provided is:
Solution:
Total expenditure of the company in 2013 = $544.44 mn
Profit percentage = 15%
Revenue = 115% of costs = $640 mn
544.44 / 0.85 = 640 mn
However, $544 million x 1.15 is actually $626 million, an answer that was provided as an option but said to be wrong. Is it not correct to get the costs, figure out 15% of the costs, and then add that to the costs to determine the total revenue?
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