Question

Big Tommy Corporation is a local grocery store organized seven years ago as a corporation. The bookkeeper prepared the following statement at year-end (assume that all amounts are correct, but note the incorrect format): BIG TOMMY CORPORATION Profit and Loss December 31 Debit Credit Net Sales $ 342,600 Cost of Goods Sold $ 247,000 Salaries and Wages Expense 50,000 Office Expenses 10,000 Travel Expenses 1,000 Income Tax Expense 10,380 Net Profit 24,220 Totals $ 342,600 $ 342,600

Calculate the gross profit percentage?

Answer 1

Gross profit is the amount of profit before deducting any operating expenses . Gross profit percentage is calculated on the amount of gross profit as a percentage of Sales revenue.

Gross profit percentage is calculated below.

GP ratio
A	Sales	$ 342,600.00
B	Less: Cost of goods sold	$ 247,000.00
C=A-B	Gross Profit	$    95,600.00
D=C/A x 100	Gross Profit Percentage	27.90%

GP Percentage =27.90%   or 28% Approx

Gross profit percentage is popularly known as gross profit ratio of GP ratio.