Profitability
Ratios:
Consider the following example:

Year 1 ($) 
Year 2 ($) 
Revenue (Revenue) 
100 
150 
Cost of sales 
75 
120 
Gross profit 
25 
30 
Gross profit
to sales (Gross profit margin)
Shows the amount of profit made on each dollar of
sales. Also indicates the percentage of sales that is available to pay for
expenses and to retain as profit.
Gross Profit 
x 100 
Revenue 
Gross profit
margin 

Year 1 
Year 2 




Can also be expressed as

Can also be expressed as
