Details about how to calculate gross profit margin

2. What is the Gross Profit Margin?
 A business
financial ratio
 A measure of
financial
performance
 Money
remaining
after
deducting
direct costs
from revenue

3. What is the purpose of calculating
the Gross Profit Margin?
 Allows
management,
investors and
financiers to
evaluate
performance
 Compare to
previous
periods +
industry
avarages

4. How do you calculate the Gross
Profit Margin?
 Gross Profit
Margin =
(Revenue -
Direct Costs) /
Revenue x 100
 Revenue is $
from
customers
 Direct costs
are costs that
can be directly
linked to the
items sold

5. What factors impact on the Gross
Profit Margin?
 Discounting in
promotional periods
 theft of goods
 not increasing selling
prices after increased
their cost price
 Staff incorrectly
charging for goods or
services
 Customers switching
to goods or services
with a lower gross
profit margin
 Wastage in time or
materials.

6. What is the Gross Profit Margin
like?
 Household
budget
 Money left over
after paying
rent or loan
repayment
 Gross Profit is
money left over
after paying for
the direct costs

7. When do businesses typically
calculate the Gross Profit Margin?
 Every month
 Key
performance
indicator
 New products
added to the
assortment

8. http://www.skillmaker.edu.au/gross-profit-margin/