When u calculate profit, it is just a figure, it is not showing the correct PROFIT.
the best way to explain this is, for example, if there are 2 companies with sales figures 100 00 and 500 00 respectively
company A makes a profit of 1000 and company B 3000
Company B has made a higher PROFIT figure.
however, when u compare it to their SALES
1000/10000 X 100 = 10%
and company B
3000/50000 X 100 = 6%
This is because Company A had a higher profit even though their sales where less than Company B, whereas company B, despite having a high sales figure, couldnt earn as much profit.
(This could b because they offered discount, etc)
I hope u got it:)
