Which metric reflects the percentage of gross profit relative to sales revenue?

The metric that reflects the percentage of gross profit relative to sales revenue is gross profit margin. This metric is calculated by taking gross profit (which is sales revenue minus the cost of goods sold) and dividing it by sales revenue. The result is then multiplied by 100 to express it as a percentage.

The gross profit margin provides insight into how efficiently a company produces its goods and services relative to its sales. A high gross profit margin indicates that a company retains a large portion of revenue after paying for the direct costs associated with producing its goods, which can contribute positively to overall profitability. This metric is particularly useful for comparing the efficiency of different companies within the same industry, as it highlights how well each company manages its production costs.