Gross margin
Gross Profit Margin
Profitability RatiosGross profit as a percentage of revenue: what remains after direct production costs, before operating expenses.
Formula
Gross Margin = (Revenue - COGS) / Revenue
Why it matters
It is the purest read on pricing power and input-cost pressure. Falling gross margins usually reach the bottom line eventually, whatever management says about cost control below the line.
Indian example
Related terms
Learn the concept
Profitability ratios →From the research
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