Enter the gross profit ($) and the total sales ($) into the Profitability Ratio Calculator. The calculator will evaluate and display the Profitability Ratio.

## Profitability Ratio Formula

The following formula is used to calculate the Profitability Ratio.

PROFR = GP / S * 100
• Where PROFR is the Profitability Ratio (%)
• GP is the gross profit ($) • S is the total sales ($)

To calculate the profitability ratio, divide the gross profit by the total sales.

## How to Calculate Profitability Ratio?

The following example problems outline how to calculate Profitability Ratio.

Example Problem #1:

1. First, determine the gross profit ($). • The gross profit ($) is given as: 20,000.
2. Next, determine the total sales ($). • The total sales ($) is provided as: 100,000.
3. Finally, calculate the Profitability Ratio using the equation above:

PROFR = GP / S * 100

The values given above are inserted into the equation below and the solution is calculated:

PROFR = 20,000 / 100,000 * 100 = 20 (%)

Example Problem #2:

For this problem, the variables required are provided below:

gross profit ($) = 60,000 total sales ($) = 200,000