If you sell a product for £100 excluding VAT and make a gross profit of £25 on it, to express your gross profit into a purchase or production cost in percentage of sales, simply follow these steps:
- Start by dividing the gross profit by the turnover to obtain the gross profit margin rate: £25/ £100 = 25%
- To convert the gross profit margin into a cost expressed as a percentage of turnover, simply enter 1 - margin rate : 1 - 25% = 75%
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