Sales Gross Profit Margin Calculator
This calculator helps you determine the gross profit margin based on sales revenue and cost of goods sold (COGS). It’s an essential metric for analyzing profitability, pricing strategies, and overall business performance.
Gross Margin Percentage Calculator
Gross Profit Margin Formula
$$\text{Gross Profit Margin} = \left( \frac{\text{Sales} – \text{COGS}}{\text{Sales}} \right) \times 100$$
Explanation:
The gross profit margin shows the percentage of revenue that exceeds the cost of goods sold. It reflects how efficiently a company produces and sells its products.
Gross profit margin is widely used in financial reporting and analysis to assess how much profit remains after covering production costs. It helps:
- Identify cost-saving opportunities
- Evaluate pricing and profitability
- Benchmark performance against competitors
Example Variables:
- Sales Revenue: $500,000
- Cost of Goods Sold: $300,000
- Gross Profit Margin = ((500,000 – 300,000) / 500,000) × 100 = 40%
Use Cases:
- Retail and eCommerce businesses
- Investors analyzing profit trends
- CFOs monitoring financial health