gross margin

Definition

Gross income divided by net sales, expressed as a percentage. Gross margins reveal how much a company earns taking into consideration the costs that it incurs for producing its products and/or services. In other words, gross margin is equal to gross income divided by net sales, and is expressed as a percentage. Gross margin is a good indication of how profitable a company is at the most fundamental level. Companies with higher gross margins will have more money left over to spend on other business operations, such as research and development or marketing.

For more information, see Gross vs Net.

Use gross margin in a sentence

You should try and come up with a projected gross margin before you decide to put out any new product.

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You should always strive to have the highest gross margin that you can get for any product that you offer.

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We had to figure out the gross margin, so I decided to let one of our employees handle it because it was too stressful for me to do at the moment.

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Gross Margin Return On Investment (GMROI) Piotroski score