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    Gross Profit margin measures profitability by calculating gross profit as a percentage of net sales. Net Profit margin calculates net income as a percentage of net sales to measure overall profitability. Both ratios are important indicators for measuring how profitable a company is for each dollar of sales.

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    Gross Profit margin measures profitability by calculating gross profit as a percentage of net sales. Net Profit margin calculates net income as a percentage of net sales to measure overall profitability. Both ratios are important indicators for measuring how profitable a company is for each dollar of sales.

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    9 views1 page

    Key Terms

    Uploaded by

    luvviku
    Gross Profit margin measures profitability by calculating gross profit as a percentage of net sales. Net Profit margin calculates net income as a percentage of net sales to measure overall profitability. Both ratios are important indicators for measuring how profitable a company is for each dollar of sales.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    Ratio Purpose Calculation

    Profitability Ratios
    Gross Profit margin Percentage of gross profit generated by Gross profit ÷ Net sales x 100
    each sales of dollar

    Net Profit margin Percentage of profit generated by each Net income ÷ Net sales x 100
    sales of dollar

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