How to Calculate Profit Margin in Retail and Trading Businesses

To calculate gross profit margin in trading, subtract the cost of goods sold from net sales, divide the result by net sales, and multiply by 100. Gross Profit Margin = (Net Sales − Cost of Goods Sold) ÷ Net Sales × 100.

For example, net sales of 10,000 and cost of goods sold of 7,000 produce a gross profit of 3,000 and a 30% gross margin. Net profit margin also considers operating expenses, financing costs, and applicable taxes. Monitor product margins, discounts, returns, and cost changes. Try Cash Cloud for free to explore sales, inventory, and profitability reporting tools.