Question: What is the formula for calculating the gross profit margin?

Options:

1. (Sales - Cost of Goods Sold) / Sales
2. Net Income / Total Assets
3. Operating Income / Total Revenue
4. Total Revenue / Total Expenses

Correct Answer: (Sales - Cost of Goods Sold) / Sales

Solution:

The gross profit margin is calculated by subtracting the cost of goods sold from sales and then dividing by sales, indicating the percentage of revenue that exceeds the cost of goods sold.