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A company grows revenue 10% and its operating margin expands from 20% to 25%. What happens to operating profit?

Model answer

Up 37.5%.

Profit = revenue × margin, so the growth factors multiply: 1.10 × (25/20) = 1.10 × 1.25 = 1.375 → +37.5%.

Check with numbers: revenue 100 → 110; profit goes from 100 ×…

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