You are told that a company has a 20% profit margin, and the discovered fraud has caused $1,400,000 more needed revenue to cover the fraud. how much was stolen?
20% of 1,400,000 = .2*1,400,000 =2*140,000 = 280,000
Thanks Damon.
My computation was
($1,400,000 * 0.20) + ($1,400,000) = $1680000
To determine how much was stolen, we need to understand the profit margin and the additional revenue needed to cover the fraud.
Profit margin is the ratio of profit to revenue, expressed as a percentage. It indicates how much profit a company makes for each dollar of revenue generated. In this case, the company has a 20% profit margin.
To calculate the profit, we multiply the revenue by the profit margin:
Profit = Revenue * Profit Margin
Let's assume the revenue before the fraud was X. This means the profit before the fraud would be:
Profit before fraud = X * 20% = 0.2X
After the fraud, the company needs an additional $1,400,000 in revenue to cover the losses. So, the new total revenue would be:
Total revenue = X + $1,400,000
Knowing that the profit after the fraud is still 20% of the total revenue, we can calculate the new profit:
Profit after fraud = Total revenue * 20% = (X + $1,400,000) * 20%
Since the profit is the difference between the revenue and the expenses, we can set up the equation:
Profit after fraud = Total revenue - Expenses
Considering the profit calculations, we can say:
(X + $1,400,000) * 20% = (X * 20%) - Stolen amount
Simplifying the equation, we get:
0.2X + $280,000 = 0.2X - Stolen amount
By rearranging the equation, we find:
Stolen amount = $280,000
Therefore, the stolen amount is $280,000.