Series 79 practice questionmediumGross Margin Calculation
If a company’s revenue is $300 million and cost of goods sold is $180 million, what is its gross margin percentage?
- A40%✓ Correct answer
- B60%
- C33%
- D83%
Explanation
Why A — 40%
Gross margin = (Revenue - COGS) / Revenue = ($300m - $180m)/$300m = $120m/$300m = 40%. 60% is the COGS ratio, 33% and 83% are not relevant to the calculation.
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