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

Test your knowledge using the equation and check your answer with the calculator above.

PROFR = GP / S * 100 = ?