The formula for calculating the gross profit ratio is:

Question

Quizplus · Accepted Answer

The gross profit ratio is calculated by dividing the gross profit by the sales. The formula is: Gross Profit/Sales. This ratio measures the profitability of a company's core business activities, and is an indicator of the company's efficiency in managing its production and inventory costs. It helps investors and managers to assess the company's performance and make decisions accordingly. Option A is incorrect because gross profit is calculated before tax, not after tax. Option B is incorrect because it is the formula for gross profit margin, not gross profit ratio. Option D is incorrect because it is the inverse of the formula for gross profit ratio.

The Formula for Calculating the Gross Profit Ratio Is