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A company had net sales of $788,500 and cost of goods sold of $562,260. Its net income was...

Question:

A company had net sales of $788,500 and cost of goods sold of $562,260. Its net income was $25,640. The company gross margin ratio equals what?

Gross Margin Ratio:

This is also known as the gross profit margin ratio. This is a profitability ratio through which the firm's gross margin is compared with the revenue generated by the firm. That means the ability of the firm to generate profit after deducting the cost of goods sold.

Answer and Explanation:

Particulars Amount
Net sales $ 788,500
Less: Cost of goods sold $562,260
Gross margin $226,240
Divide: Net sales $788,500
Gross maring ratio 28.69%

Gross Margin Ratio is 28.69%


Learn more about this topic:

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How to Calculate Gross Profit Margin: Definition & Formula

from Financial Accounting: Help and Review

Chapter 5 / Lesson 17
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