Performance Measures of a Company

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Two commonly used measures of profitability of a company include Gross Profit Margin and Net Profit Margin.

Gross Profit Margin

Gross Profit Margin = (Gross Profit) ÷ (Gross Sales)

Gross profit margin measures gross profit as a percentage of gross revenue. This helps capture profit as a percentage of revenue, and helps assess components that affect profitability.

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