The gross margin represents the amount of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by the company.
 | | Term of the Day | Words to Know | | |  | | Gross Margin | | Gross margin is a company's net sales revenue minus its cost of goods sold (COGS). In other words, it is the sales revenue a company retains after incurring the direct costs associated with producing the goods it sells, and the services it provides. The higher the gross margin, the more capital a company retains on each dollar of sales, which it can then use to pay other costs or satisfy debt obligations. The net sales figure is simply the gross revenue, less returns, allowances, and discounts. | | Read More » | | Related to "Gross Margin" | | | | SPONSORED BY INVESCO | | The Complete Guide to ETFs | | ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. | | Learn More » | | | Net Sales | | Net sales are the result of gross sales minus returns, allowances, and discounts. They are a factor in gross profit but do not include costs of goods sold. | | Read More » | | | Cost of Goods Sold | | Cost of goods sold (COGS) is defined as the direct costs attributable to the production of the goods sold in a company. | | Read More » | | | Profit | | Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners. | | Read More » | | | Profitability Ratios | | Profitability ratios are a class of financial metrics used to assess a business's ability to generate profit relative to items such as its revenue, operating costs, or balance sheet assets over time. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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