Question

Relationship between sales revenue and gross profit margin

Answer 1

Calculate gross margin by subtracting the cost of goods sold from the total sales revenue, and then divide by the total net sales. The margin represents the percentage of total sales revenue that a company keeps as gross profit after deducting the costs directly related to producing the goods or services sold.

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.