Gross Profit Rate Calculator

Gross Profit, also referred to as Gross Margin, is the profit made on the sale of merchandise after subtracting the merchandise costs. It is measured as a percentage of annual sales. Maintaining Gross Profit rates is critical to positive cash flow. Gross Profit performance is impacted by merchandise pricing and reimbursement, merchandise costs as well as sales mix between low and high margin categories. This calculation requires two inputs: Annual Sales and Cost of Goods Sold, both of which appear on your Income Statement or tax return.

Annual Sales: Annual Sales from Income Statement
Cost of Goods Sold: Merchandise purchases for resale adjusted for change in inventory from Income Statement
Gross Profit Dollars: Gross Profit Dollars generated	$
Gross Profit Rate: Gross Profit Dollars as a percentage of annual sales	%