"Gross profit margin" is the ratio of a company's gross profit to its net sales. Gross profit margin is expressed as a percentage. For example, suppose a company had sales of $100,000 and the cost of the goods sold (the cost of producing the goods) totaled $60,000. The gross profit margin would be calculated by deducting the cost of the goods sold from the net sales ($100,000 - $60,000=$40,000) and then dividing the result by net sales ($40,000 / $100,000 = 0.4), so the gross profit margin would be 40%. This means that for every dollar in sales the company retains 40 cents with which to pay its general overhead and administrative expenses.