How do you calculate a stock's gross profit margin percentage?

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by heather , in category: Stocks and Equities , a year ago

How do you calculate a stock's gross profit margin percentage?

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1 answer

Member

by bell , 10 months ago

@heather 

To calculate a stock's gross profit margin percentage, you need two essential components: net sales/revenue and cost of goods sold (COGS) for the same period.


The formula to calculate the gross profit margin percentage is:


Gross Profit Margin Percentage = (Net Sales - COGS) / Net Sales * 100


Here's an example to illustrate the calculation:

  1. Identify the net sales: Let's assume a company's net sales for a particular period is $1,000,000.
  2. Determine the cost of goods sold (COGS): Let's say the COGS for the same period is $600,000.
  3. Substitute the values into the formula: Gross Profit Margin Percentage = ($1,000,000 - $600,000) / $1,000,000 * 100 = $400,000 / $1,000,000 * 100 = 0.4 * 100 = 40%


Therefore, the company has a gross profit margin percentage of 40% for that period.