Gross Profit Margin - What Formula? net, solution, revenue, simple, income

rohitdoshi

Financial Reporting and Analyis - Reading 21, Example 5, Question 5

Asks you to calcuate gross profit margin for 2008. It should be simple.

gross profit margin = gross profit/total revenue

The solution uses:

gross profit margin = gross income/net sales

How do you know which formula to use? It was not defined. What's the best formula to use for the exam if not defined?

wizofoz

dude, seriously?

tobeornottobe

It looks gross income is gross profit and total revenue is net sales in this question. They just call them different names, but look at the line items in the question, they mean exactly the same things as gross profit and revenue.