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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.