9.20: Gross Margin Percentage
- Page ID
- 75709
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Learning Objectives
- Analyze the gross margin percentage of sample retailers
Gross margin = net sales – cost of goods sold. However, to express this as a percentage, gross margin is divided by net sales (gross margin dollars / net sales). This allows the retailer to assess what portion of sales were spent on COGS to generate the sales and what portion remains to cover operating expenses. That is:
- 1 – gross margin percent = the portion of sales spent as COGS
- 1 – (COGS / net sales) = gross margin percent
Practice Questions
Video -- Profit Margin, Gross Margin, and Operating Margin - With Income Statements
Contributors and Attributions
- Gross Margin Percentage. Authored by: Patrick Williams. Provided by: Lumen Learning. License: CC BY: Attribution