MBATricks

Tips and Tricks about my MBA experience

Finance :: Profitability Ratio :: Gross (Profit) Margin

The Gross Margin ration is used to calculate the percent of total revenues that the company retains after incurring the direct costs associated with producing the goods and services sold by the company.

 

Gross (Profit) Margin = (Net Sales – COGS) / Net Sales

 

The higher the ratio, the more the company retains on each dollar of sales.

 

The Gross Margin, the Net Sales are taken from the Income Statement.

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