Which financial ratio indicates the proportion of revenue that exceeds the COGS?
Which financial ratio indicates the proportion of revenue that exceeds the COGS?
Explanation
The financial ratio that indicates the proportion of revenue is the gross profit margin.
The gross profit margin is calculated by:
- subtracting the COGS from the revenue
- and then dividing the result by the revenue.
This ratio represents the percentage of revenue that remains as:
gross profit after accounting for the cost of producing the goods or services.