Part II: Working with Formulas and Functions
FIGURE 15.1
Financial statement for a manufacturing company
The gross margin formula simply subtracts cell C4 from cell C3. The gross margin percent
divides C5 by C3, but note that the C3 reference is absolute because it has dollar signs. This
allows you to copy the formula to other lines on the income statement to see the percent-
age of revenue, a common analysis performed on income statements.
Calculating markup
Markup is often confused with gross margin percent, but they are different. Markup is the
percentage added to costs to arrive at a selling price. Figure 15.2 shows the sale of a single
product, the markup applied, and the gross margin realized when sold.
FIGURE 15.2
Markup and gross margin percent from a single product
The markup is computed by dividing the selling price by the cost and subtracting 1.
=(C3/C2)-1
