Question

A company's net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. its gross margin ratio equals:

Answer 1

To find gross margin ratio, you divide gross profits by net sales. First, to find gross profit, you subtract cost of goods from net sales ($775,420-$413,890). You then divide the result ($361,530) by $775,420. The result is 0.466, or a gross margin ratio of 46.6%.