| Profit Margin = Net Income / Sales Revenue |
| Sales |
| – COGS |
| Gross Profit |
| Gross Profit Margin = Gross Profit / Sales Revenue |
| Gross Profit Ratio is the same as Gross Profit Margin |
| Beginning Inventory |
| + Net Purchases |
| – Ending Inventory |
| COGS |
| Beginning Inventory |
| + Net Purchases |
| – COGS |
| Ending Inventory |
| Beginning Inventory |
| + Net Purchases |
| Goods Available for Sale (Some professors care about this... some don't) |
| Sales Revenue |
| – Sales Returns and Allowances |
| – Sales Discounts |
| Net Sales |
| Purchases |
| – Purchase Returns and Allowances |
| – Purchase Discounts |
| Net Purchases |
| + Transportation In |
| Cost of Goods Purchased |