Gross profit ratio is computed by dividing gross profit by:Group of answer choicesfinancial expenses.cost of sales.net sales.operating expenses.
Question
Gross profit ratio is computed by dividing gross profit by:
- financial expenses.
- cost of sales.
- net sales.
- operating expenses.
Solution
The Gross Profit Ratio is computed by dividing Gross Profit by:
Net Sales.
Here's why:
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Gross Profit is calculated by subtracting the Cost of Goods Sold (COGS) from Net Sales.
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The Gross Profit Ratio is a profitability ratio that shows the proportion of money left over from revenues after accounting for the cost of goods sold.
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To calculate the Gross Profit Ratio, you divide the Gross Profit by Net Sales and multiply by 100 to express it as a percentage.
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Therefore, the Gross Profit Ratio is computed by dividing Gross Profit by Net Sales. This ratio gives investors and other stakeholders an idea of how efficiently a company can turn sales into profit.
Similar Questions
What factors affect a business’s gross profit ratio, i.e. what can cause the gross profit ratio to increase and what can cause it to decrease?
Profit margin is calculated by dividing:Question 2Answera.sales by cost of sales.b.profit by total assetsc.profit by equityd.profit by net sales
If sales revenue is $600,000 and cost of sales is $450,000, the gross profit margin is:33%25%67%75%
ratios measure how effectively a firm is using its various resources to achieve profits.
Sales revenue less cost of goods sold is calledSelect answer from the options belowmarginal income.gross profit.net profit.net income.
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