Summary
Application: Gaspard's Pastry
States :
Gaspard's Patisserie produces a range of macarons that it sells in its store and online. For the year 2023, Gaspard wants to analyze the profitability of its sales. Currently, the purchase price excluding tax (PA HT) of a batch of macarons is €15, and it sells each batch at a sales price excluding tax (PV HT) of €25. In 2023, Gaspard estimates selling 1200 batches. The VAT rate applicable to food products is 5,5%.
Work to do :
- Calculate the margin rate on macaron sales.
- Determine the expected net sales for 2023.
- Calculate the overall margin achieved over the year.
- What is the expected VAT collected for the year?
- Discuss the financial implications for Gaspard if the purchase cost increased by 10%.
Proposed correction:
-
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€25 – €15) ÷ €15) x 100 = 66,67%.
The margin rate is therefore 66,67%.
-
The net sales figure is the sales price multiplied by the quantity sold: net sales = net sales x quantity sold.
Replacing, €25 x 1200 = €30.
The expected turnover excluding tax is €30.
-
The overall margin is calculated by multiplying the unit margin by the quantity sold.
Unit margin = PV excluding tax – PA excluding tax = €25 – €15 = €10.
Overall margin = €10 x 1200 = €12.
Gaspard will achieve an overall margin of €12 over the year.
-
The VAT collected is calculated by multiplying the turnover excluding tax by the VAT rate: VAT = turnover excluding tax x VAT rate.
Replacing, €30 x 000 = €0,055.
The VAT collected expected for the year is €1.
-
If the purchase cost increased by 10%, the new PA excluding tax will be €15 x 1,10 = €16,50.
The new margin rate would be: ((€25 – €16,50) ÷ €16,50) x 100 = 51,52%.
This decrease in the margin rate could reduce Gaspard's profitability, perhaps requiring a revision of sales prices or an improvement in the efficiency of operations to maintain its margin.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: The Corner Bookstore
States :
Librairie du Coin wants to analyze the financial results of its book sales during the last quarter. On average, the purchase price excluding tax (PA HT) of a book is €8, while the sale price excluding tax (PV HT) is €15. Over the quarter, the bookstore sold 1000 books. Books are subject to a reduced VAT rate of 5,5%.
Work to do :
- Calculate the markup rate of book sales.
- Estimate the total net sales for the quarter.
- Determine the overall margin made by the bookstore.
- Calculate the VAT collected during the quarter.
- What strategy could you suggest if the competition offers lower prices?
Proposed correction:
-
The markup rate is calculated using the formula: ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€15 – €8) ÷ €15) x 100 = 46,67%.
The markup rate is therefore 46,67%.
-
The net turnover is calculated by multiplying the sales price by the quantity sold.
Turnover excluding tax = €15 x 1000 = €15.
The net turnover for the quarter is €15.
-
The overall margin is equal to the unit margin multiplied by the quantity sold.
Unit margin = €15 – €8 = €7.
Overall margin = €7 x 1000 = €7.
The bookstore achieved an overall margin of €7.
-
The VAT collected is calculated by VAT = Net turnover x VAT rate.
Replacing, €15 x 000 = €0,055.
The VAT collected is €825.
-
If the competition is offering lower prices, the bookstore might consider promotions, events, or improving customer service to attract customers and maintain its customer base.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: Camille's Wines
States :
Les Vins de Camille is a wine merchant specializing in organic wines. For its Bordeaux range, the purchase price excluding tax (PA HT) is €10 per bottle, and the sale price excluding tax (PV HT) is €18. Camille expects to sell 1500 bottles this year. The wines are subject to 20% VAT.
Work to do :
- Calculate the margin rate for Bordeaux wines.
- Estimate the net sales for the year.
- Determine the overall margin for Bordeaux sales.
- How much VAT will be collected on these sales?
- Evaluate the impact of a 5% discount on the selling price on the unit margin.
Proposed correction:
-
The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€18 – €10) ÷ €10) x 100 = 80%.
The margin rate is 80%.
-
The net turnover is the product of the sales price and the quantity sold.
Turnover excluding tax = €18 x 1500 = €27.
The annual turnover excluding tax is €27.
-
The overall margin is calculated by multiplying the unit margin by the quantity sold.
Unit margin = €18 – €10 = €8.
Overall margin = €8 x 1500 = €12.
The overall margin is €12.
-
The VAT collected is given by VAT = HT turnover x VAT rate.
Replacing, €27 x 000 = €0,20.
The VAT collected will be €5.
-
With a 5% discount, the new PV excluding tax will be €18 x 0,95 = €17,10.
New unit margin = €17,10 – €10 = €7,10.
This price reduction would affect the unit margin by decreasing it, which could impact profitability unless it increases sales volume sufficiently.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: Stella Jewelry
States :
Bijouterie Stella offers a collection of silver bracelets. The purchase price excluding tax (PA HT) of a bracelet is €40, and the sale price excluding tax (PV HT) is €85. Stella plans to sell 500 bracelets this year and the applicable VAT is 20%.
Work to do :
- Calculate the markup rate for each bracelet sold.
- Estimate the potential net sales for the year.
- Calculate the overall expected margin for the bracelets.
- How much VAT will be collected on these sales?
- What could be a strategy to increase revenue without changing prices or costs?
Proposed correction:
-
The markup rate is calculated as follows: ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€85 – €40) ÷ €85) x 100 = 52,94%.
The brand rate of bracelets is 52,94%.
-
The net turnover is calculated by multiplying the sales price by the quantity sold.
Turnover excluding tax = €85 x 500 = €42.
The expected turnover excluding tax is €42.
-
The overall margin is obtained by multiplying the unit margin by the quantity sold.
Unit margin = €85 – €40 = €45.
Overall margin = €45 x 500 = €22.
The overall margin will be €22.
-
The VAT collected is calculated with VAT = HT turnover x VAT rate.
Replacing, €42 x 500 = €0,20.
The VAT collected will be €8.
-
To increase revenue, Stella could diversify by adding new products or offering complementary services such as customization that would attract customers without impacting prices.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: Tech-Innov Group
States :
Tech-Innov Groupe is a technology company that develops software solutions. Their flagship software is sold at a price of €300 excluding VAT per license, while the direct development cost per license (DDC) is €80. For the next year, they plan to sell 2000 licenses. The applicable VAT is 20%.
Work to do :
- Calculate the margin rate per software license sold.
- Estimate the expected net sales for the upcoming year.
- Calculate the overall expected margin for all license sales.
- What will be the total amount of VAT collected?
- How could Tech-Innov adapt its strategy to increase its sales if the market becomes more competitive?
Proposed correction:
-
The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€300 – €80) ÷ €80) x 100 = 275%.
The margin rate per license is 275%.
-
The net sales figure is calculated from the sales price and the expected quantity.
Turnover excluding tax = €300 x 2000 = €600.
The expected turnover excluding tax is €600.
-
The overall margin is obtained by multiplying the unit margin by the quantity sold.
Unit margin = €300 – €80 = €220.
Overall margin = €220 x 2000 = €440.
The overall expected margin is €440.
-
The VAT collected is obtained with VAT = HT turnover x VAT rate.
Replacing, €600 x 000 = €0,20.
The total amount of VAT collected will be €120.
-
To face increased competition, Tech-Innov could strengthen its value proposition by adding innovative features, improve customer service or reexamine its distribution channels to reach new market segments.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: Charm & Elegance
States :
Charme & Élégance is a fashion company that sells wool scarves. The purchase cost excluding tax of a scarf is €25, while the sale price excluding tax is €70. The company plans to sell 800 scarves this year and the VAT is 20%.
Work to do :
- Determine the margin rate for each scarf sold.
- Calculate the projected net sales for the year.
- Evaluate the overall margin from these sales.
- How much VAT will be collected during the year?
- Imagine a strategy to double sales without lowering prices.
Proposed correction:
-
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€70 – €25) ÷ €25) x 100 = 180%.
The margin rate is 180%.
-
The net turnover is determined by the product of the net PVT and the number of scarves sold.
Turnover excluding tax = €70 x 800 = €56.
The turnover excluding tax for the year is €56.
-
The overall margin is calculated by multiplying the unit margin by the quantity sold.
Unit margin = €70 – €25 = €45.
Overall margin = €45 x 800 = €36.
The overall margin is €36.
-
The VAT collected is calculated by VAT = Net turnover x VAT rate.
Replacing, €56 x 000 = €0,20.
The amount of VAT collected will be €11.
-
To double sales, Charme & Élégance could strengthen its online presence with a digital marketing campaign or create strategic partnerships with complementary stores to reach a wider audience without changing prices.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: BioSaveur Workshop
States :
Atelier BioSaveur offers organic fruit and vegetable baskets. The purchase cost excluding tax per basket is €12, while the sale price excluding tax is €20. BioSaveur plans to sell 2500 baskets this year. These products benefit from a reduced VAT rate of 5,5%.
Work to do :
- Calculate the margin rate for each basket sold.
- Determine the net sales for the year.
- What is the overall margin expected for these baskets?
- Calculate the total amount of VAT collected during the year.
- Come up with an innovative idea to drive demand and increase sales by 20%.
Proposed correction:
-
The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€20 – €12) ÷ €12) x 100 = 66,67%.
The margin rate is 66,67%.
-
The net turnover is obtained by multiplying the sales price by the quantity of baskets sold.
Turnover excluding tax = €20 x 2500 = €50.
The turnover excluding tax is €50.
-
The overall margin is calculated from the unit margin and the quantity sold.
Unit margin = €20 – €12 = €8.
Overall margin = €8 x 2500 = €20.
The expected overall margin is €20.
-
The VAT collected is calculated with VAT = HT turnover x VAT rate.
Replacing, €50 x 000 = €0,055.
The total amount of VAT collected will be €2.
-
To stimulate demand, BioSaveur could introduce a monthly subscription at a favorable price, offering exclusive online recipes to diversify product usage and engage customers with ongoing added value.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: FitnessPro Equipment
States :
FitnessPro Equipment sells professional treadmills. The purchase cost excluding taxes of a treadmill is €500, and the sales price excluding taxes is €900. The company plans to sell 300 treadmills this year, with a VAT of 20%.
Work to do :
- Calculate the margin rate for each rug sold.
- Estimate the net sales for the year.
- Determine the overall margin for carpet sales.
- How much VAT will be collected for the year?
- How could FitnessPro increase profitability without increasing sales prices?
Proposed correction:
-
The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€900 – €500) ÷ €500) x 100 = 80%.
The margin rate for each carpet is 80%.
-
The net turnover is the product of the sales price and the quantity sold.
Turnover excluding tax = €900 x 300 = €270.
The turnover excluding tax for the year is €270.
-
The overall margin is calculated by multiplying the unit margin by the quantity sold.
Unit margin = €900 – €500 = €400.
Overall margin = €400 x 300 = €120.
The overall margin is €120.
-
The VAT collected is determined by VAT = Net turnover x VAT rate.
Replacing, €270 x 000 = €0,20.
The amount of VAT collected will be €54.
-
To increase profitability, FitnessPro could reduce operating costs, optimize the supply chain or focus on exceptional after-sales service that would increase customer loyalty and repeat purchases.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |
Application: The Flowers of Lisbon
States :
Les Fleurs de Lisbonne is a florist known for its elegant and colorful compositions. They buy a standard bouquet at a purchase price excluding taxes of €12 and sell it at a price of €30 excluding taxes. For this year, the company plans to sell 600 compositions. The applicable VAT is 5,5%.
Work to do :
- Calculate the markup rate for each bouquet sold.
- Estimate the net turnover that the company hopes to achieve.
- Calculate the overall margin for these sales forecasts.
- How much VAT will be collected?
- Suggest a strategy to improve the company's visibility without increasing prices.
Proposed correction:
-
The markup rate is calculated as follows: ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€30 – €12) ÷ €30) x 100 = 60%.
The brand rate per bouquet is 60%.
-
The net turnover is calculated by the product of the sales price and the expected quantity.
Turnover excluding tax = €30 x 600 = €18.
The expected turnover excluding tax is €18.
-
The overall margin is obtained by multiplying the unit margin by the quantity sold.
Unit margin = €30 – €12 = €18.
Overall margin = €18 x 600 = €10.
The overall margin for these forecasts is €10.
-
The VAT collected is given by VAT = HT turnover x VAT rate.
Replacing, €18 x 000 = €0,055.
The amount of VAT collected will be €990.
-
To improve visibility, the company could leverage social media by regularly posting attractive photos of new compositions, host workshops or collaborate with local influencers to expand its reach without affecting pricing.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| VAT collected | CA excluding VAT x VAT rate |