Gross margin is a company's total sales revenue minus its cost of goods sold COGSdivided by total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that margin definition in forex company retains after incurring the margin definition in forex costs associated with producing the goods and services it sells.
The higher the percentage, the more the company retains on each dollar of sales, to service its other costs and debt obligations. Companies use gross margin to measure how their production costs relate to their revenues. For example, if a company's gross margin is falling, it may look for processes that allow it to cut labor costs or for suppliers who offer lower costs on materials.
Alternatively, it may decide to increase prices to boost revenue. Businesses may also use gross margins to forecast how much money they have left over from sales to cover other operating expenses. Gross profit margins can also be used to measure company efficiency or to compare two companies of different sizes to each other.
While gross margin only looks at the relationship between revenue and COGS, net profit margin takes all of a business's expenses into account. When calculating net profit margins, businesses subtract their COGS as well as ancillary expenses, such as product distribution, wages for sales reps, miscellaneous operating expenses and tax. Gross margin, also called gross profit margin, helps a company assess the profitability of its manufacturing activities, while net profit margin helps the company assess its overall profitability.
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Gross Margin Definition | Investopedia
1. Borrowed money that is used to purchase securities. This practice is referred to as "buying on margin ". 2. The amount of equity contributed by a customer as a.
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