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When calculating Gross Profit Margin, do you include the startup funds you raised in your net sales or just the sales you've made For example, should it look like: Net Sales.. ...Plus startup funds ... Less COGS Gross Profit OR Net Sales (icluding startup funds)... ...Less COGS Gross Profit |
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Short answer No, you don't / should not include the founds raised. The gross profit margin expresses your profits as a percentage of your goods sold. This percentage allows you to compare the profits of businesses of various sizes because the results are measured as a percentage rather than in raw numbers. However, because different industries have different norms, gross profit margin is hard to compare between companies in different sectors. To calculate the gross profit margin as a percent, you need to know the revenues and the cost of the goods sold. Step 1 - Subtract the amount your goods sold cost from the revenues the sales generate to find your gross profit. For example, if you purchase $10,000 of goods and sell them for $11,800, you would subtract $10,000 from $11,800 to get a profit of $1,800. Step 2 - Divide your gross profit by your cost of goods sold. In this example, you would divide $1,800 by $10,000 to get 0.18. Step 3 - Multiply the result from Step 2 by 100 to find the gross profit margin percentage. Finishing the example, you would multiply 0.18 by 100 to find that your gross profit margin equals 18 percent. |
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