Ratios: Gross Profit Rate definitions Flashcards
Ratios: Gross Profit Rate definitions
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Gross Profit Percentage Shows the portion of sales revenue remaining after covering cost of goods sold, expressed as a percentage to assess core profitability. Net Sales Total sales revenue after deducting returns, allowances, and discounts, representing actual revenue earned from customers. Cost of Goods Sold Total direct costs incurred to produce or purchase goods that were sold during a specific period. Gross Profit Amount left from net sales after subtracting cost of goods sold, indicating earnings from core business activities. Gross Margin Alternative term for gross profit, reflecting the difference between net sales and cost of goods sold. Profitability Ratio Financial metric used to evaluate a company's ability to generate earnings relative to sales, assets, or equity. Benchmarking Process of comparing a company's financial ratios to those of competitors or industry averages to assess performance. Sales Revenue Total income generated from selling goods or services before any deductions are made. Industry Average Standardized value representing the typical performance metric within a specific sector, used for comparison. Inventory Goods held for sale by a business, the cost of which is included in cost of goods sold when sold. Income Statement Financial report summarizing revenues, expenses, and profits over a specific period, highlighting operational results. Selling Expenses Costs directly associated with distributing, marketing, and selling products to customers. Percentage Form Expression of a ratio or value as a fraction of 100, commonly used to present financial metrics for clarity.
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