Calculate the Gross Profit and Gross Profit Percentage for this year and last year, creating a small table, such as the following:
- Calculate the Gross Profit and Gross Profit Percentage for this year and last year, creating a small table, such as the following:
This Year
Last Year
Net Sales
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Cost of Goods Sold
800
1,200
Gross Profit
400
200
Gross Profit Percentage
33%
14%
In the example above, sales decreased, gross profit increased, and the gross profit percentage increased. Therefore, sales are more profitable. We made 33 cents of gross profit on every dollar of sales this year, but only 14 cents of gross profit on every dollar of sales last year. Sales decreased, but sales are actually generating more profit overall, both as an absolute dollar value and as a percentage.