Multiple Choice
A gross profit ratio of 55\% indicates that:
14. Financial Statement Analysis
Ratios: Gross Profit Rate
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A company has sales of \$300,000 and gross profit of \$135,000. What is the gross profit percentage?
A
40%
B
45%
C
55%
D
60%
Verified step by step guidance1
Identify the formula for calculating the gross profit percentage: \( \text{Gross Profit Percentage} = \left( \frac{\text{Gross Profit}}{\text{Sales}} \right) \times 100 \).
Substitute the given values into the formula: Gross Profit = \$135,000 and Sales = \$300,000.
Calculate the fraction: \( \frac{135,000}{300,000} \).
Convert the fraction to a percentage by multiplying by 100.
Compare the calculated percentage with the given options to determine the correct answer.
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