The gross profit ratio measures the percentage of revenue left over after deducting cost of goods sold from net sales.

Question

Quizplus · Accepted Answer

The gross profit ratio, also known as gross margin ratio or gross profit margin, is calculated by dividing gross profit (net sales minus cost of goods sold) by net sales and multiplying the result by 100 to express it as a percentage. This ratio represents the proportion of each dollar of sales that is available to cover other expenses and provide profits for the business. A high gross profit ratio indicates a better ability to generate profit from sales, while a low ratio may suggest pricing or cost control issues.

The Gross Profit Ratio Measures the Percentage of Revenue Left