Calculation of gross and net profit to turnover. - SS2 Commerce Past Questions and Answers - page 1
Gross profit margin is calculated by dividing the ______ by the turnover and multiplying by 100.
Gross profit
Cost of goods sold (COGS)
Gross profit
Net profit margin takes into account all of the following except:
Operating expenses
Taxes
Gross profit
The formula for calculating gross profit margin is:
(Turnover / Gross Profit) X 100
(Gross Profit / Turnover) X 100
(Net Profit / Turnover) X 100
Net profit margin represents the percentage of net profit in relation to the ______.
Gross Profit
Operating expenses
Turnover
Gross profit margin indicates the proportion of each dollar of ______ that is retained as gross profit.
Net profit
Turnover
Operating expenses
Explain the difference between gross profit margin and net profit margin in relation to a business's financial performance.
Gross profit margin represents the percentage of gross profit in relation to turnover, indicating the proportion of each dollar of turnover that is retained as gross profit. Net profit margin, on the other hand, represents the percentage of net profit in relation to turnover, indicating the proportion of each dollar of turnover that is retained as net profit after covering all expenses.