The National Directory of Certified Public Accountants

Ask A CPA - Financial Statements

What Is The Gross Profit Margin As It Relates To Financial Statements ?

The gross profit on inventory is divided by the average profit of the inventory. Low end items may be marked up 500% while a high end is only 30%. Use the average profit across all inventory items. If the average is 10, which means for every dollar you invested, you earned $10 more in profit.

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