Question

Operating profit ratio and gross profit margin formula

Answer 1

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Here's the answer ⤵

Gross profit margin is calculated by subtracting cost of goods sold (COGS) from total revenue and dividing that number by total revenue.

The top number in the equation, known as gross profit or gross margin, is the total revenue minus the direct costs of producing that good or service.

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Answer 2

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The difference between Gross Profit Margin and Operating Profit Margin is that the gross profit margin accounts for only Cost of Goods sold, but the Operating Profit Margin accounts for both Cost of Goods sold and Administration/Selling expenses.