The gross profit ratio, also known as the gross margin ratio, is a financial metric that compares gross profit to net sales. It is expressed as a percentage and is obtained by dividing the gross profit by net sales.
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The gross profit ratio (or gross profit margin) shows the gross profit as a percentage of net sales. The ratio provides an indication of the company's pricing policy. Certain businesses aim at a faster turnover through lower prices.
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The gross profit margin, operating profit, and net profit margin ratios are the most commonly used measurements of business profitability.
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The gross profit ratio shows the proportion of profits generated by the sale of products or services, before selling and administrative expenses. It is used to examine the ability of a business to create sellable products in a cost-effective manner.
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The gross profit margin (also known as gross profit rate, or gross profit ratio) is a profitability measure that shows the percentage left of sales after deducting cost of sales. It measures gross profit in comparison to sales ...
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Gross profit margin is an analytical metric calculated as a company’s net sales minus the cost of goods sold (COGS). It's often expressed as the gross profit as a...
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Definition: Gross profit ratio is a calculation that determines the correlation between a company’s gross profit margin and the net sales (gross sells net of credits and discounts issued).
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Gross Profit Ratio. Also known as the Gross Profit Margin ratio, it establishes a relationship between gross profit earned and net revenue generated from operations (net sales). The gross profit ratio is a profitability ratio expressed as a percentage hence it is multiplied by 100.
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The gross profit formula subtracts the cost of goods sold from revenue, which shows the amount that can finance indirect expenses and investments. The gross profit margin, however, indicates the gross profit as a percentage of revenue and is calculated by dividing gross profit by revenue.
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The gross profit ratio is a profitability metric calculated by dividing the gross profit (GP) by net sales. It represents the profit generated by a company after deducting the cost of goods sold.
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