Multiple Choice
A company has sales of \$300,000 and gross profit of \$135,000. What is the company's cost of goods sold?
14. Financial Statement Analysis
Ratios: Gross Profit Rate
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If XYZ Company has net sales of \$500,000 and cost of goods sold of \$320,000, the gross profit percentage is:
A
18%
B
36%
C
48%
D
64%
Verified step by step guidance1
Start by understanding the formula for Gross Profit, which is: Gross Profit = Net Sales - Cost of Goods Sold (COGS).
Calculate the Gross Profit by subtracting the Cost of Goods Sold from the Net Sales: \$500,000 - \$320,000.
Once you have the Gross Profit, use the formula for Gross Profit Percentage: (Gross Profit / Net Sales) * 100.
Substitute the values into the formula: (Gross Profit / \$500,000) * 100.
Calculate the Gross Profit Percentage to determine which of the given options is correct.
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