Question

Frankie owns a financial consulting business. At the completion of a full financial setup for a client, the income statement would have the following information: Sales $675 and a cost of sales of $550. What would their gross margin be?

Answer 1

The gross margin is $125.

Step-by-step explanation:

Gross margin is a financial metric that represents the percentage difference between a company's revenue and its cost of goods sold (COGS). It is a profitability ratio that measures the efficiency of a company in producing and selling its goods or services.

The gross margin can be calculated by subtracting the cost of sales from the sales revenue. In this case, the sales revenue is $675 and the cost of sales is $550.

Therefore, the gross margin is $675 - $550 = $125.