in this video on Gross Profit Percentage, here we discuss how to calculate gross profit percentage using its formula along with practical examples. ๐๐ก๐๐ญ ๐ข๐ฌ ๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐๐๐ง๐ญ๐๐ ๐?
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Gross Profit Percentage is a profitability measure that measures how much of every dollar of income is left over after the value of the goods sold (COGS) is paid off.
๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐๐๐ง๐ญ๐๐ ๐ ๐ ๐จ๐ซ๐ฆ๐ฎ๐ฅ๐
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Gross Profit Percentage Formula = Gross Profit/Total Sales *100%
๐๐ฑ๐๐ฆ๐ฉ๐ฅ๐ ๐จ๐ ๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐๐๐ง๐ญ๐๐ ๐
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Let us consider an example of a company called ABC Limited for calculation of gross profit. ABC Limited is in the business of manufacturing customized roller skates for both professional and amateur skaters. At the end of the financial year, ABX Limited has earned $160,000 in total net sales along with the following expenses.
Labour Wages - $60,000
Raw Materials Expense - $30,000
Factory Rent - $10,000
First we need to calculate cost of goods sold and gross profit.
Cost of Goods Sold = $60,000+$30,000+$10,000
COGS= $10,000
Gross Profit = Total Sales - COGS
=$160,000 -$10,000
=$60,000
Therefore, using above formula gross profit percentage is as follows,
Gross profit percentage = Gross profit / Total sales * 100%
= $60,000 / $160,000 * 100%
= 37.50%
To know more about the ๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐๐๐ง๐ญ๐๐ ๐, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐๐ซ๐:-
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