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Hey there welcome back to Accounting Stuff Im James and today were kicking off a new series covering financial ratios these are thetools that help us analyze financial statements first up Gross Profit Margin What is Gross Profit Margin? Gross Profit Margin is Gross Profit divided byRevenue its a profitability ratio that measures a businesss ability to generate Gross Profitfrom each unit of Revenue earned we often show it as a percentage so if thats the casethen remember to multiply by 100 Gross Profit is a businesss Revenue minusits direct Cost of Sales so heres another way to write the same equation and keep in mindthat Cost of Sales goes by a few different names Cost of Services if a business sells services and Cost of Goods Sold if it sells products anyway lets break this down so we can get a full understanding of how Gross Profit Margin works well start with Profit you can find businessesProfit on its income statement an Income Statement is a financial report t
