Gross Margin %
View All TermsGross Margin is the percentage of {Gross Profit} out of sales or {Revenue}. It is calculated as
{Gross margin}
= {Gross Profit} / {Revenue}
= ({Revenue} - {Cost of Goods Sold}) / {Revenue}
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
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