- Created by: biggestdrakefan
- Created on: 07-05-21 21:03
Gross profit of a business is an absolute number. Number calculated by deducting direct costs from sales revenue. Helpful to meausre the profit in relation to the sales revenue. Gives a relative meausre of profit (profitability).
Profitability can be measured for each of the 3 types of profit identified earlier in the chapter: Gross, Operating and Net:
- Gross profit margin = gross profit/sales revenue * 100
Comparison can be made with the profitability achieved by other companies
- Operating profit margin = operating profit/sales revenue * 100
city and media analysts evaluating…