Which financial ratio indicates the proportion of revenue that exceeds the COGS?
- Grass profit margin
- Net profit margin
- Operating profit margin
- Return on investment (roi)
Explanation
The financial ratio that indicates the proportion of revenue is the gross profit margin.
The gross profit margin is calculated by:
- subtracting the COGS from the revenue
- and then dividing the result by the revenue.
This ratio represents the percentage of revenue that remains as:
gross profit after accounting for the cost of producing the goods or services.
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