Consider the following: Code:
A = Gross profit to net sales ratio
B = Gross profit to cost of goods sold ratio

Which equation is correct?

Name: Consider the following: Code: A = Gross profit to net sales ratio B = Gross profit to cost of goods sold ratio Which equation is correct?
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Question

Consider the following: Code: 
A = Gross profit to net sales ratio
B = Gross profit to cost of goods sold ratio

Which equation is correct?

Quizplus · Accepted Answer

A = Gross Profit / Net Sales, and B = Gross Profit / Cost of Goods Sold (COGS). Gross Profit = Net Sales - COGS. Therefore, A = (Gross Profit / Net Sales) = (B * COGS) / (COGS + Gross Profit) = B / (1 + B).

Consider the Following: Code