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letamp;#39;s spend 60 seconds on gross profit margin gross profit margin is a key measure of profitability it tells us What proportion or percentage of every one pound of sales revenue is turned into gross profit the formula to calculate gross profit margin is gross profit divided by sales revenue and donamp;#39;t forget to express that as a percentage by timesing by 100 for example a business achieves sales revenue of 400,000 and a gross profit of 80 ,000 well then the gross profit margin is 1 180,000 divided by 400,000 expressed as a percentage so 45% and that means that for every 00 of sales the business makes a gross profit of 45 gross profit margins vary by business and by industry so their main use as a measure of profitability is to compare one period to another and to compare the gross profit margins of closed competitors