With revenues of $10 billion and a gross profit margin of 65%, what is gross profit?

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Multiple Choice

With revenues of $10 billion and a gross profit margin of 65%, what is gross profit?

Explanation:
Gross profit margin shows how much of each dollar of revenue remains after covering the cost of goods sold. When the gross margin is 65%, gross profit is 65% of revenue. So with $10 billion in revenue, gross profit = 0.65 × 10B = $6.5 billion. As a quick check, COGS would be 35% of revenue (100% − 65% = 35%), which is 0.35 × 10B = $3.5B, and revenue minus COGS indeed equals $6.5B.

Gross profit margin shows how much of each dollar of revenue remains after covering the cost of goods sold. When the gross margin is 65%, gross profit is 65% of revenue. So with $10 billion in revenue, gross profit = 0.65 × 10B = $6.5 billion. As a quick check, COGS would be 35% of revenue (100% − 65% = 35%), which is 0.35 × 10B = $3.5B, and revenue minus COGS indeed equals $6.5B.

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