A financial ratio that relates gross profit margin to the volume of sales:
Like margin ratios, in general, this ratio is a measure of the operational success of a company. For example, suppose a company has reported, for a given period, the following: $50,000 in sales and $35,000 in costs of sales. Therefore, its gross profit margin is:
Gross profit margin rate= (50,000- 35,000) / 50,000 = 0.30
This figure indicates that the company was able to produce 30 cents in profits from every dollar of sales.
