For example if sales are 8000 and costs total 6000 the difference between the two is 2000. The profit margin is a ratio of a companys profit sales minus all expenses divided by its revenue. Calculation of the gross profit percentage formula is done by dividing the gross profit by the total sales and expressed in percentage terms.
Its always expressed as a percentage.
The difference is gross profit. Profit revenue - costs so an alternative margin formula is. Divide the resulting number into the net sales to get the ratio which represents the percentage. Take the figure shown for the gross profit over any given period and divide this monetary value by the total revenue of the business during that time.
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