ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the formula for calculating the HPP Ratio?
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(COGS + Sales) x 100%
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(COGS-Sales) x 100%
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(COGS:Sales) x 100%
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HPP x 100%
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Explanation:
Detailed explanation-1: -The gross profit ratio is calculated by dividing the gross profit by the net sales. To make it easier to read and compare, the result is usually multiplied by 100 so it can be expressed as a percentage. This allows you to determine what percentage of the company’s revenue is profit.
Detailed explanation-2: -The gross profit margin formula, Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue x 100, shows the percentage ratio of revenue you keep for each sale after all costs are deducted. It is used to indicate how successful a company is in generating revenue, whilst keeping the expenses low.
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