Gross margin, also known as gross profit margin or gross margin ratio, refers to a company's net sales revenue, or total revenue, minus its goods, services, and interest expenses. One of the most detailed and f
The major difference between these two terms lies in the measured value and their purpose. Still, both values are equally important. Without a figure for gross income, it becomes impossible to figure out the gross profit margin for aservice business. But what changes when we add the word “m...
What you need to know about gross profit margin: why it matters, how to calculate gross profit margin, and how to improve it for your business.
In business, gross profit, gross margin and gross profit margin all mean the same thing. It's the amount of money you make when you subtract the cost of a product from the sales price. When dealing with dollars, gross profit margin is also the same as markup. It's only when you calc...
Let's say you want to figure out the gross profit margin of a fictional firm called Greenwich Golf Supply. You can find its income statement at the bottom of this page in table GGS-1. For this exercise, assume the average golf supply company has a gross margin of 30%. ...
Because profit margins vary, you can’t compare yours to companies in different industries. So, what is a good profit margin? Take a look at somestandard net and gross profit marginsfor various industries below: IndustryNet Profit MarginGross Profit Margin ...
Gross margin may also be referred to as gross profit margin. Gross Margin vs. Net Margin Gross margin focuses solely on the relationship between revenue and COGS, butnet marginor net profit margin is a little different. A company's net margin takes all of a business's expenses into account...
1. Gross Profit Margin The gross profit defines profit as all income retained after accounting for the cost of goods sold (COGS), making it the simplest profitability metric. The gross profit margin compares total revenue to gross profit. The cost of goods sold (COGS) includes those expenses ...
For instance, say you pay $8,000 for goods and sell them for $10,000. Your gross profit is $2,000. Divide this figure by the total revenue to get your gross profit margin: 0.2. Multiply this figure by 100 to get your gross profit margin percentage: 20 percent. ...
Gross profit margin is a ratio that indicates how much of a company's revenue represents earnings before selling and administrative expenses. A business can calculate a gross profit margin for an individual product or it can calculate gross profit margin