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Calculate the gross profit margin (*Please show your calculations). Please give an explanation for the answer.

To calculate the **Gross Profit Margin**, we use the following formula:

\[
\text{Gross Profit Margin} = \left( \frac{\text{Gross Profit}}{\text{Net Sales}} \right) \times 100
\]

From the financial statement in the image:

- **Net Sales**: \$200,000
- **Gross Profit**: \$80,000

### Calculation:

\[
\text{Gross Profit Margin} = \left( \frac{80,000}{200,000} \right) \times 100 = 40\%
\]

### Explanation:
The Gross Profit Margin measures how much of the company's sales revenue is converted into gross profit after covering the cost of goods sold (COGS). In this case, XYZ Corporation has a gross profit margin of 40%, meaning for every dollar of sales, the company retains 40 cents after covering its production costs.

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Do you have any questions, or would you like further details? 

Here are 5 related questions you might find interesting:
1. How can the gross profit margin be improved in a business?
2. What is the difference between gross profit margin and net profit margin?
3. Why is it important to track the gross profit margin over time?
4. How does gross profit margin vary by industry?
5. What impact does lowering COGS have on gross profit margin?

**Tip**: Consistently monitoring the gross profit margin helps in assessing the financial health of a company, especially in managing production costs and pricing strategies.

Learn how to calculate the Gross Profit Margin using a detailed example. In this case, XYZ Corporation's Gross Profit Margin is calculated as 40% based on a Gross Profit of $80,000 and Net Sales of $200,000. Understand the significance of Gross Profit Margin in assessing financial health and managing production costs.

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