The gross margin percentage is calculated as
A)gross margin divided by cost of goods sold.
B)gross margin divided by net sales revenue.
C)gross margin divided by net income.
D)net income divided by gross margin.

Question

Quizplus · Accepted Answer

The gross margin percentage is calculated by dividing the gross margin (net sales revenue minus cost of goods sold) by the net sales revenue. It shows what percentage of each dollar of sales is left after deducting the cost of goods sold to cover expenses and provide a profit. Option A divides gross margin by cost of goods sold, which gives the gross margin ratio, not the percentage. Option C divides gross margin by net income, which is not relevant. Option D divides net income by gross margin, which gives a different ratio altogether.

The Gross Margin Percentage Is Calculated as