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What is gross profit percentage? The gross profit percentage is the margin that the company makes on its sales revenue. It’s expected to remain reasonably constant from year to year.
This is the margin that the company makes on its sales revenue. The gross profit percentage formula is:
The comparsion of margins can be very useful but it’s especially important to look at businesses within the same sector. For example, food retailing may have low margins, but a manufacturing industry will have higher margins.
Some business sectors support lower margins than others, but if a company shows lower margins than usual, that suggests scope for improvement.
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