How To Find Gross Profit Percentage?
To find the gross profit percentage, divide the gross profit (revenue minus the cost of goods sold) by revenue and multiply by 100 to express the result as a percentage.
Gross Profit Percentage Formula
The formula for gross profit percentage is:
Gross Profit Percentage = (Gross Profit / Revenue) x 100
- Gross Profit = Revenue - Cost of Goods Sold
- Revenue = Total amount of money brought in from sales
- Cost of Goods Sold (COGS) = The cost of the products or services that were sold.
To put it in simple terms,Gross Profit Percentage = ( (Revenue - COGS) / Revenue ) x 100
It's important to note that, Gross profit percentage is a profitability metric that shows the percentage of revenue remaining after accounting for the cost of goods sold (COGS). It's used to measure a company's financial health and the efficiency of its production process.
Example Of Gross Profit Percentage
- A company has revenue of $100,000 and the cost of goods sold is $60,000.
- The gross profit would be $100,000 - $60,000 = $40,000
- The gross profit percentage would be ($40,000 / $100,000) x 100 = 40%
- A retail store sells a product for $100 and it cost them $50 to purchase the product from the supplier.
- The gross profit would be $100 - $50 = $50
- The gross profit percentage would be ($50 / $100) x 100 = 50%
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