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

    how to calculate Gross profit and GP Ratio?

    visakha chan

      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?
          Don Wise

          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?
            visakha chan

            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?
              Don Wise

              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