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1

Profit Margin Calculation

Hello,

I don't understand why the previous year is taken into account in the calculation of the profits after the elimination of the product category. Shouldn't I consider:

- the new revenues: 501.5 M

- calculate the new % in terms of product segmentation?

Thanks

Hello,

I don't understand why the previous year is taken into account in the calculation of the profits after the elimination of the product category. Shouldn't I consider:

- the new revenues: 501.5 M

- calculate the new % in terms of product segmentation?

Thanks

1 answer

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Hi Enrico,

Fair question.

However, the only reason you know new revenues is 501.5M is because you used the previous year numbers.

What i mean is, the previous year's revenue was 590. When you take out products under 5 euro (which make up 15% of revenues), you get 501.5M (590 times .85).

So, by considering 501.5M you are, in of itself, using the previous year numbers

Hi Enrico,

Fair question.

However, the only reason you know new revenues is 501.5M is because you used the previous year numbers.

What i mean is, the previous year's revenue was 590. When you take out products under 5 euro (which make up 15% of revenues), you get 501.5M (590 times .85).

So, by considering 501.5M you are, in of itself, using the previous year numbers