How to Calculate Gross Profit Margin Calculation?

gross profit margin ratio

Gross profit margin is a financial matric which has difference between cost of goods and revenue. We can calculate the Gross margin by separating gross profit by revenues. It has purpose in determining the value of incremental sales and also as a guide of promotion and pricing decision. Gross margin can be shown as in total financial terms or a percentage. There is also a way to calculate gross margin. You will need gross profit margin calculator to know how calculate the gross margin of your company. In addition,  we know the gross profit of a company with gross profit margin.

After that, gross profit margin is used as a feedback to related companies based on economical. Moreover, after knowing gross profit margin through gross profit margin calculator, the company uses it as evaluation tool. How far a certain company gets its profit. It is also affect to the sponsorship or other relation of company. To get the calculation, you can use the formula or use some templates that usually are easier to use. Nowadays, you can easily get the example of margin templates for free. Then, you can also easily to find the margin calculator to help you in calculated the gross profit margin.

gross profit margin formula

The first way of gross profit margin calculator is by using a percent which is need to know the cost of goods sold and revenues. First, you have to subtract total cost of the goods from revenue in order to find the gross profit. For instance, cost of your goods is \$10.000 and you sell them for \$ 12.000, so you will get profit of \$ 2.000 which is the result of subtraction of \$ 12.000 and \$ 10.000. Second, divide the gross profit by the total revenue generated. In this case, you can divide \$ 2.000 by \$ 12.000 to get 0.16.

Third, multiply the result by 100 for finding the gross profit margin percentage. In this case, you have to multiply 0.16 by 100 for finding the gross profit margin equal to 16%. So, here is the gross profit margin calculation formula for the manual. If you want to make it fast, you can instantly use gross margin calculator which has been available in any website.

Is there any simpler way on how to calculate margin gross? You can just use the formula. For make it simple, the formula to calculate the gross profit margin is gross margin = 100 * revenue/profit to get the percentage. After that, to get profit equation you can use formula of profit = revenue – costs of goods. Or, for an alternative, margin = 100 * (revenue – costs of goods)/revenue. For revenue formula you can use revenue = 100 * profit/margin. To sum up, you can calculate how much that you have pay by costs = revenue – margin * revenue/100. So, it must be the simplest alternative formula or you can just use an application of margin percentage calculator. It will be easier to calculate since you just have to input the numbers.

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