How to Calculate Gross Profit Margin Percentage
For
business gurus, check out this. The gross profit margin expresses your profits
as a percentage of the total sales revenues generated. This percentage allows
you to compare the profits of businesses of various sizes because the results
are measured as a percentage rather than in raw numbers. However, because
different industries have different norms, gross profit margin is hard to
compare between companies in different sectors. To calculate the gross profit
margin as a percent, you need to know the revenues and the cost of the goods
sold.
business gurus, check out this. The gross profit margin expresses your profits
as a percentage of the total sales revenues generated. This percentage allows
you to compare the profits of businesses of various sizes because the results
are measured as a percentage rather than in raw numbers. However, because
different industries have different norms, gross profit margin is hard to
compare between companies in different sectors. To calculate the gross profit
margin as a percent, you need to know the revenues and the cost of the goods
sold.
Step 1
Subtract the total costs of your goods from the revenues the sales
generate to find your gross profit. For example, if you purchase #100,000 of
goods and sell them for #120,000, you would subtract #100,000 from #120,000 to get a profit of #20,000
generate to find your gross profit. For example, if you purchase #100,000 of
goods and sell them for #120,000, you would subtract #100,000 from #120,000 to get a profit of #20,000
Step 2
Divide your gross profit by your total revenue generated. In this
example, you would divide #20,000 by #120,000 to get 0.17
example, you would divide #20,000 by #120,000 to get 0.17
Step 3
Multiply the result from Step 2 above by 100 to find the gross
profit margin percentage. Once your done with your calculation, the example,
you would be to simply multiply 0.17 by
100 to find that your gross profit margin which
equals 16.7% percent.
profit margin percentage. Once your done with your calculation, the example,
you would be to simply multiply 0.17 by
100 to find that your gross profit margin which
equals 16.7% percent.
Calculator Use
Calculate the gross margin percentage, mark up percentage and
gross profit of a sale from the cost and revenue, or selling price, of an item.
gross profit of a sale from the cost and revenue, or selling price, of an item.
* Revenue = Selling Price
Margin
Formulas/Calculations:
Article source: Smallbusiness.chron.com
