An increase in gross profit percentage indicates that:
A)cost of goods sold as a percentage of sales has decreased.
B)cost of goods sold as a percentage of sales has increased.
C)operating expenses as a percentage of sales have increased.
D)operating expenses as a percentage of sales have decreased.

Question

Quizplus · Accepted Answer

Gross profit percentage is calculated by dividing the gross profit by total revenue and multiplying by 100. An increase in gross profit percentage means that the gross profit has increased relative to total revenue. This can happen if cost of goods sold as a percentage of sales has decreased, indicating that the business is more efficient in producing goods and services or has negotiated better deals with suppliers.

An Increase in Gross Profit Percentage Indicates That