What is 'Gross Margin'?

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Gross Margin Gross margin is a company's total sales revenue minus its cost of goods sold (COGS), divided by total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct 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. Breaking it Down: The gross margin number represents the portion of each dollar of revenue that the company retains as... Read More Related to "Gross Margin" What are the differences between gross profit and gross margin? Learn how gross profit and gross margin are calculated and how each is used in fundamental analysis. Generally, these numbers are similar within an industry. Read More What is the difference between gross margin and net margin? Learn the basics of gross profit margin and net profit margin, including how each is calculated and interpreted as a metric of business profitability. Read More What are the main income statement ratios? Learn how to calculate and interpret some of the most common and insightful financial ratios, like earnings per share, from a company's income statement. Read More Related Definitions Margin In a general context, margin refers to the edge or border of something or the amount by which an item falls short or surpasses another item. Read More Gross Earnings Gross earnings, for individuals, refers to the total income earned prior to the application of any tax deductions or adjustments. Read More Profitability Ratios A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. Read More Marginal Profit Marginal profit is the profit earned by a firm or individual when one additional unit is produced and sold. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: