financial+ratios

financial ratios

 Where:COGS = Cost of Goods Sold Also known as "gross margin." []

[] **Converting between gross margin and markup (Gross Profit)** Converting markup to gross margin Examples:Markup = 100% = 1Markup = 66.7% = 0.667 Converting gross margin to markup Examples:Gross margin = 50% = 0.5Gross margin = 40% = 0.4 **Using gross margin to calculate selling price** Given the cost of an item, one can compute the selling price required to achieve a specific gross margin. For example, if your product costs $100 and the required gross margin is 40%, then Selling price = $100 / (1 – 40%) = $100 / 0.6 = $166.67