Gross Profit Margin
Gross profit as percentage of revenue.
Formula
Gross Profit Margin = (Gross Profit ÷ Revenue) × 100
Real World
Primark maintains a gross profit margin around 60% by sourcing clothing cheaply from low-cost manufacturers, despite charging very low retail prices.
Exam Focus
When evaluating a change in gross profit margin, identify whether it was caused by a price change or a cost change — examiners reward this distinction.
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