Calculating the Gross Profit Margin
Cost of goods sold divided by Sales returns the gross profit margin.
Step by step calculations for cost of goods and gross profit are illustrated in the Figurewizard sample forecast for cost of goods sold and gross profit. The gross profit margin is set at 41%.
How to Calculate Markup from Profit Margin
Taking the Figurewizard forecast's year one gross profit margin of 41% as an example, the markup on cost that represents is calculated as follows.
| Profit margin | 41.0% |
| Therefore cost of goods sold = | 59.0% |
| Margin divided by cost of goods = markup | 69.5% |
How to Calculate Profit Margin from Markup
Calculating the margin from markup is an equally simple matter.
| Markup | 69.5% |
| add: 100% to markup | 169.5% |
| Markup divided by (markup +100%) = margin | 41.0% |