Sales Ratio Calculator

What is a Sales Ratio?

A Sales Ratio helps evaluate a business’s efficiency and profitability. It compares sales to costs, helping you understand whether your business is earning profits or operating at a loss.

Formulas Used

1. Gross Profit

This shows how much money you keep after subtracting your cost of goods sold from total sales.

$\text{Gross Profit}=\text{Value of Sales}-\text{Cost of Sales}$

2. Gross Profit Ratio (%)

This shows what percentage of your sales is actual profit.

$\text{Gross Profit Ratio}=\left(\frac{\text{Gross Profit}}{\text{Value of Sales}}\right)\times 100$

3. Cost to Sales Ratio (%)

This tells you what percentage of your sales is consumed by cost.

$\text{Cost to Sales Ratio}=\left(\frac{\text{Cost of Sales}}{\text{Value of Sales}}\right)\times 100$

Example Calculation

Let’s say:

• Cost of Sales = $5,000
• Value of Sales = $8,000

Step 1: Gross Profit

$\text{Gross Profit}=8000-5000=3000$

Step 2: Gross Profit Ratio

$\text{Gross Profit Ratio}=\left(\frac{3000}{8000}\right)\times 100=37.5\%$

Step 3: Cost to Sales Ratio

$\text{Cost to Sales Ratio}=\left(\frac{5000}{8000}\right)\times 100=62.5\%$​​​​​​​

Final Output:

• Gross Profit: $3,000
• Gross Profit Ratio: 37.5%
• Cost to Sales Ratio: 62.5%

Use this Sales Ratio Calculator to get a clearer picture of how efficiently your business converts costs into sales. A higher Gross Profit Ratio generally indicates healthier profit margins.