Gross profit margin is calculated by:

The correct calculation for gross profit margin focuses on understanding a company's profitability in relation to its sales revenue. Gross profit margin is defined as gross profit—which is the difference between total revenue and the cost of goods sold (COGS)—divided by total revenue. This ratio is then multiplied by 100% to express it as a percentage.

By using this formula, businesses can evaluate how efficiently they are producing and selling goods. A higher gross profit margin indicates a more lucrative product line or efficient cost management, while a lower margin suggests that costs are eating into profits, requiring strategic evaluation.

The other options do not accurately calculate gross profit margin. For instance, income minus expenses would provide net income rather than focusing specifically on the relationships between gross profit and total revenue. Similarly, dividing net income by total assets measures return on assets, which is unrelated to gross profit. Lastly, calculating operating costs divided by sales does not yield a profit margin, as it ignores revenue and only considers costs against sales figures.