The
gross margin ratio is also known as the gross profit margin or the gross profit
percentage.
The gross margin ratio is computed by dividing the
company's gross profit dollars by its net sales dollars.
swim department net sales--------------------- $1,150,000
cost of goods sold -------------------------------- $638,400
This means its gross profit is $511,600 (net sales of $1,150,000 minus its cost of goods sold of $638,400) and its gross margin ratio is 44% (gross profit of $511,600 divided by net sales of $1,150,000).
