In this video we have discuss Gross Profit Margin Formula along with some simple practical examples.

𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Investors must start investigating at every level. He or She needs to know how every part of the company works. When an investor evaluates the statement of income, it's not enough to check a profit ratio such as a net profit margin.

Let us look at the formula of Gross Profit Margin

Gross Profit Margin =Gross Profit / Revenue * 100


𝐔𝐬𝐞 𝐨𝐟 𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Return on profit is an important factor for investors. The investors mainly look at the net profit margin and also the gross profit margin. The gross profit margin calculator is useful for investors because it can be easily compared with other similar companies by calculating the percentage.

𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐄𝐱𝐚𝐦𝐩𝐥𝐞
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Let us take a practical example to explain the formula of the gross profit margin.

In its statement of income, Chocolate Pastries Ltd. has the following information-

Net Sales – $500,000
Cost of Goods Sold – $300,000

To find out the year 's gross margin. First of all, we need to find out Chocolate Pastries Ltd's gross profit.

Following is the calculation to find gross profit.

Gross Profit = (Net Sales – Cost of Goods Sold)

= $500,000 - $300,000 = $ 200,000.

So, Using the formula of gross profit margin, we get –

Gross Profit Margin = Gross Profit / Revenue * 100

= $200,000 / 500,000 * 100 = 30%

From the above calculation of the gross profit margin percentage, we can say that Chocolate Pastries Ltd. 's gross profit margin is 30% each year.

To know more about the 𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚, you can go to this 𝐥𝐢𝐧𝐤 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐝 𝐡𝐞𝐫𝐞 :- [ Ссылка ]

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