Abstract
The gross profit margin ratio measures the profitability (or gross profit margin) that is generated from each dollar of sales. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs than its competitors. In that respect, Lego Group increased its Gross profit margin between 2004 and 2005.
This ratio shows us that the company has a net income of DKK 0.58 for each corona of sales. This is a rather high number compared to the rest of the sector. On the other hand, the gross profit margin of Mattel decreased between 2004 and 2005 from 47.2% to 45.8%. This result is closer to the average of the sector. With respect to Gross profit margin, Lego has better results than Mattel. Thus Lego is more profitable and generates more profits for each dollar of sales.
