The Gross Profit Margin Ratio is an important metric used to measure a company’s financial health. It is calculated by dividing the company’s gross profit (revenue minus cost of goods sold) by its total revenue. This ratio can tell analysts and investors whether or not the company is making enough money to cover their expenses and keep the business running. By closely monitoring this ratio, businesses can use it to identify areas where they need to improve profitability and capitalize on opportunities to increase revenue.