# Candy Company had sales of $320,000 and cost of goods sold of$112,000. What is the gross profit...

## Question:

Candy Company had sales of $320,000 and cost of goods sold of$112,000. What is the gross profit margin (ratio of gross profit to sales)?

## Profit margin:

Profit margin refers to the profit earned as a percentage of sales. It is an important ratio as it forms an important basis to compare the different companies in the same or similar industry.

Gross profit margin = Gross profit / Sales x 100

Gross Profit
= Sales - Cost of Goods sold
= $320,000.00 -$112,000.00
= \$208,000.00

Now,

Gross Profit Margin
= 208,000 / 320,000.00 x 100
= 65.00%

How to Calculate Gross Profit Margin: Definition & Formula

from Financial Accounting: Help and Review

Chapter 5 / Lesson 17
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