Gross Margin
Gross margin is a financial term used to describe the difference between the cost of goods sold and the revenue generated from the sale of those goods. It is expressed as a percentage of the total revenue and is used to measure the profitability of a business. It is calculated by subtracting the cost of goods sold from the total revenue and then dividing the result by the total revenue. The higher the gross margin, the more profitable the business is.
History of Gross Margin
Gross margin has been used as a measure of profitability since the early days of accounting. It was first used in the 19th century by merchants who wanted to measure the profitability of their businesses. Since then, it has become an important financial metric used by businesses to measure their profitability and make decisions about pricing, inventory, and other aspects of their operations.
Comparison of Gross Margin
| Company | Gross Margin |
|---|---|
| Company A | 20% |
| Company B | 30% |
| Company C | 40% |
Summary
Gross margin is an important financial metric used to measure the profitability of a business. It is calculated by subtracting the cost of goods sold from the total revenue and then dividing the result by the total revenue. The higher the gross margin, the more profitable the business is. For more information about gross margin, you can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Net Margin
- Operating Margin
- Profit Margin
- Gross Profit
- Gross Loss
- Gross Profit Margin
- Operating Income
- Net Income
- Return on Investment (ROI)
- Return on Equity (ROE)
