Question

A company had net sales of $752,000 and cost of goods sold of $543,000. Its net income was $17,530. The company's gross margin ratio equals:

Answer 1

Answer:

The gross margin ratio is 27.8%

Explanation:

Gross Margin is an indicator of whether a company is running an efficient operation and if its sales are good enough

The formula for calculating gross margin ratio is

Total revenue - cost of goods sold ÷ total revenue  x 100

Total revenue = $752,000,

Cost of goods sold = $543,000

therefore  gross margin ratio

$752,000 - $543,000 = $209,000

$209,000 ÷ $752,000 =  0.2779

0.2779 × 100 =  27.79 ≅ 27.8%