Profit Margins

Question 1

How do we calculate gross and net profit margins

Answer 1

Gross Profit Margin = Gross Profit / Sales Turnover
Net Profit Margin = Net Profit / Sales Turnover

Question 2

What are the good levels for net and gross profit margins

Answer 2

Gross Profit Margin should be around 50%
Net Profit Margin should be around 15%