Triangle Business Daily

What is the significance of a low gross profit rate?

Gross profit is the result of 'mark-up' on your sales. What are the consequences of a low profit rate?

Public Comments

1. It depends on the inventory turnover. Grocery stores have extremely low gross profit rates, but they overturn their inventory about 20x a year. Best buy might have a significantly higher gross profit rate, but inventory turnover is much lower. To make accurate comparisons and decisions you must factor in inventory turnover.
2. There is a lot of competition and the product isn't unique so the seller doesn't have pricing power.