3 Replies Latest reply on Nov 27, 2018 10:32 AM by Don Wise

# how to calculate Gross profit and GP Ratio?

I have Purchase data, and sale data. First of all, I do not know how to join the data correctly yet. it seem the data is too big for every loading.

but how to calculate GP and GP ratio?

• ###### 1. Re: how to calculate Gross profit and GP Ratio?

Hello Visakha,

GROSS PROFIT:  Sales - Cost of Goods Sold = Gross Profit

So a sample calculation for Gross Profit would be SUM([Sales]) - SUM([Cost of Goods Sold])

What makes up Cost of Goods Sold?  You'll need to decide which if (or all) any of the following make up that amount:

Variable costs include:

Materials used

Direct labor

Packaging

Freight

Plant supervisor salaries

Utilities for a plant or a warehouse

Depreciation expense on production equipment

Machinery

Fixed costs generally are more static in nature. They include:

Office expenses such as supplies, utilities, a telephone for the office, etc.

Salaries and wages of office staff, salespeople, officers and owners

Payroll taxes and employee benefits

Advertising, promotional and other sales expenses

Insurance

Auto expenses for salespeople

Professional fees

Rent

GROSS PROFIT MARGIN (RATIO): Gross Profit / Sales = Gross Profit Margin

So a sample calculation for Gross Profit Margin would be (use previous Gross Profit calculation): [Gross Profit] / SUM([Sales]) and format as a % Percentage if desired or leave as decimal.

Hope that helps! Thx, Don

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• ###### 2. Re: how to calculate Gross profit and GP Ratio?

Thank you very much. Don Wise

My data sources only have Purchase and Sale. and the professor asked for GP ratio between 2 products.

So I assume GP = Total Sale - Total Purchase. Can it be ?

• ###### 3. Re: how to calculate Gross profit and GP Ratio?

Hi Visakha,

I have no idea!

I can only point you in the right direction. You'll need to decide whether your data matches what I've provided.  I don't have access to your data so cannot definitively tell you one way or the other.  Thx!  Don