What is Gross Profit : GP & Gross Profit Margin : GPM ?

What is Gross Profit : GP

          The Company’s operating income, whether from the sale of goods or services, is deducted from the product’s cost of manufacture. Alternatively, that service.

Formula for calculating gross profit, Calculating gross profit : GP
Gross Profit = RevenueCost of Goods Sold : COGS

Gross Profit Margin : GPM

        Gross Profit Margin GPM is a ratio calculated by comparing gross profit to sales. which gross profit margin percentage This will reveal the company’s fundamental profitability. Whichever business can maintain a consistent gross profit margin demonstrates that it is a strong business.

Formula for calculating Gross Profit Margin : GPM
Gross Profit Margin (%) = (Sales – COGS / Sales) x 100

What gross profit margin may business owners use to examine their operations?

  1. Can be used to develop a strategy for pricing products or reducing the price of products for promotional purposes, thereby increasing sales.
  2. It can be used to compare the business’s current performance to its historical performance.
  3. It is useful for comparing the profits of various products and services. by calculating the gross profit margin on each of our products and services to determine which products and services are profitable. Additionally, determine which goods and services should be discontinued if they are not profitable for the business.

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