USE OF RATIOS

There are 3 important ratios to be looked at:

  1. Gross profit margin
  2. Mark up
  3. Stock turnover

If a firm has a uniform Gross Profit for all the items sold then any information available on sales or purchases can be used to derive the total Gross Profit for the period and incase there is sufficient information on expenses, then the Net Profit can also be derived.

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