gross profit margin investment & finance definition
A frequently used financial ratio that is one
indicator of a company’s financial health. Companies often refer to the fact
that their gross margins are improving, which means that the expenses involved
in selling their goods are decreasing, thereby leading to increased profits.
Gross profit is sales, or revenues, minus the cost of goods sold. That number
is divided by sales to get the gross profit margin, which is expressed in
percentage terms.
See gross profit margin in Wall Street Words
A measure calculated by dividing gross profit by net sales. Gross profit margin is an indication of a firm's ability to turn a dollar of sales into profit after the cost of goods sold has been accounted for. Also called
gross margin,
margin of profit. Compare
net profit margin. See also
return on sales.
Learn more about gross profit margin