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Take a LookQuick Definition
Gauges how much profit a company is extracting out of every dollar of sales.
There's More to Financial Analysis Than You Think...
The Financial Analysis Success Kit can help!
Why you should take a look at the Financial Analysis Success Kit:
We've combined all our highly popular financial analysis tools into one megafinancialanalysiskit that will save you hundreds of dollars if purchased separately. The kit contains 9 files packed with the most important financial ratio analysis tools you can find to help rocket your way to mastering financial analysis. The kit includes:

The eBook "Learn Ratio Analysis In Minutes"

The Learn Financial Ratio Analysis Excel Spreadsheet (2 versions!)

A BONUS eBook..."Key Financial Statement Terms"

Another HUGE BONUS...FivePart Financial Ratio Cheat Sheet Series
The result? You get all these professionally created tools for a great low price.
Learn more on our product page:
Gross Profit to Net Sales Formula
Explanation of Gross Profit to Net Sales
The Gross Profit to Net Sales ratio is fundamentally a profitability ratio. By subtracting the Cost of Goods Sold from the Net Sales, we end up with the Gross Profit. Dividing this by Net Sales produces the ratio of profit to sales, basically showing how much profit a company is producing out of every dollar of sales.
Importance of Gross Profit to Net Sales
A decreasing Gross Profit to Net Sales ratio is a negative sign, indicating the company is becoming less profitable. The company may even have an increasing Net Sales, but the cost to the company to generate those extra sales may be degrading profits. This ratio varies wildly between companies and industries, so the best knowledge from this ratio can be gained by measuring it over several periods.