# 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?

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.