Accounting Dictionary
Gross Profit Ratio
The Gross Profit Ratio is (Sales –Materials) divided by sales.
This is sometimes called the contribution margin ratio. It shows the amount of profit earned before selling and administrative costs are deducted. This is a profitability ratio so we want it to be as high as possible.
https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/gross-profit-ratio/
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