How to Calculate Profit as Percent of Sales

by Mike Keenan - Updated March 16, 2018
Higher profit percentages often mean better business.

When measuring the success of a business, one way to quantify the success is to measure the gross profit. A complex, but potentially more telling statistic is to measure the profit as a percentage of sales. The higher the percentage of sales that equals profit, the more of each dollar brought in remains with the company rather than going to the costs of running the business, such as goods sold or employees.

Subtract your costs from your total sales to find your profit. For example, if you have sales of $230,000 and costs of $180,000, subtract $180,000 from $230,000 to get $50,000 in profit.

Divide the profit by the total sales. In this example, divide $50,000 by $230,000 to get 0.2173913043478261.

Multiply the 0.2173913043478261 by 100 to find the profit as a percent of sales, which equals about 21.74 percent of sales.

About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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