# Gross profit margin

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Gross profit margin

Gross profit margin is a financial ratio used to assess the profitability of a firm's core activities, excluding fixed costs.

The general calculation is

$mathrm\left\{Gross profit margin\right\} = frac\left\{mathrm\left\{Revenue - Cost of Sales\left\{mathrm\left\{Revenue$

The gross profit margin is related to the net profit margin, which assesses the profitability of an organization after including fixed costs.

Indicates the relationship between net sales revenue and the cost of goods sold. A high gross profit margin indicates that a business can make a reasonable profit on sales, as long as it keeps overhead costs in control.

Gross profit is gross profit / sales revenue x 100.

ee also

*Gross profit

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### Look at other dictionaries:

• Gross profit margin — Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. The New York Times Financial Glossary * * * gross profit margin UK US noun [C or U] (ABBREVIATION GPM) ACCOUNTING ► a company’s… …   Financial and business terms

• gross profit margin — Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. Bloomberg Financial Dictionary * * * gross profit margin UK US noun [C or U] (ABBREVIATION GPM) ACCOUNTING ► a company’s profit… …   Financial and business terms

• Gross Profit Margin — A financial metric used to assess a firm s financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and… …   Investment dictionary

• gross profit margin — noun (finance) the net sales minus the cost of goods and services sold • Syn: ↑gross profit, ↑margin • Topics: ↑corporate finance • Hypernyms: ↑net income, ↑ …   Useful english dictionary

• gross profit margin — gross profit …   Accounting dictionary

• gross operating margin — UK US noun [C] (ABBREVIATION GOM) ACCOUNTING ► a company’s profit from selling goods or services in a particular period after costs directly related to producing them are subtracted. Gross operating margin is often shown as a percentage of money… …   Financial and business terms

• Profit margin — Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.[1] Net profit Margin = (Net Income / Revenue) x100 The profit… …   Wikipedia

• gross profit — gross margin; = gross profit margin The difference between the sales revenue of a business and the cost of sales. It does not include the costs of finance, administration, or distribution. Compare: net profit …   Accounting dictionary

• gross profit — gross margin; gross profit margin The difference between the sales revenue of a business and the cost of sales It does not include the costs of finance, administration, or distribution. Compare net profit …   Big dictionary of business and management

• gross profit — noun (finance) the net sales minus the cost of goods and services sold • Syn: ↑gross profit margin, ↑margin • Topics: ↑corporate finance • Hypernyms: ↑net income, ↑ …   Useful english dictionary