Gross profit ratio

• Overall


  High figures are preferred, Gross Profit is needed to cover costs and provide a return and a high figure might indicate that prices are becoming uncompetitive

  Comes from a balance sheet

  Gross profit = sales - cogs and it indicates the mark-up or contribution margins. Non-retail businesses may have difficulty calculating this ratio

  This figure is important when compared to previous years and other similar businesses

  • percentage
• Strategies


  Strategies to improve this is to raise prices and or obtain stock at lower prices. This might not always be possible or could result in falling sales due to high prices and poorer quality products. Increasing the level of sales can compensate for lower profit margins