What's Your Gross Profit Margin Really Saying?

How is the gross profit margin calculated?

• Gross profit margin = (Revenue - Cost of Sales) / Revenue

How is the gross profit margin useful?

• It indicates how efficient a company is in producing its goods and services.
• It provides a general indicator of a company's financial health.
• It provides a basis for comparison within industries.
• It can be used to judge earning expectations and return on investment.

Overview/Description

A company's gross profit margin provides useful information about its financial health. This impact explores the significance of GPMs.

Target Audience

Any individuals interested in gaining essential business finance knowledge