Nu Company reported the following data for its first year of operations: What is Nu's gross profit ratio?
$$\begin{array} { | l | r | }
\hline \text { Net sales } & \$ 2,800 \
\hline \text { Cost of goods sold } & 1,680 \
\hline \text { Operating expenses } & 880 \
\hline \text { Ending inventories } & 820 \
\hline
\end{array}$$

Question

Nu Company reported the following data for its first year of operations: What is Nu's gross profit ratio?
$$\begin{array} { | l | r | } 
\hline \text { Net sales } & \$ 2,800 \
\hline \text { Cost of goods sold } & 1,680 \
\hline \text { Operating expenses } & 880 \
\hline \text { Ending inventories } & 820 \
\hline
\end{array}$$

Quizplus · Accepted Answer

Gross profit ratio is calculated as (Net Sales - Cost of Goods Sold) / Net Sales. Here, it is (2800 - 1680) / 2800 = 0.40 or 40%.

Nu Company Reported the Following Data for Its First Year