Gross margin is same as gross profit ratio. That is, it is the ratio of gross profit to sales.
Gross margin or gross profit margin is the difference between the sales and the production costs of the company after excluding overhead, payroll, taxation, and interest payments. It expresses the relationship between gross profit and sales revenue. It is a measure of how well each rupee of a company's revenue is utilized to cover the costs of goods sold.
Higher gross margins for a manufacturer reflect greater efficiency in turning raw materials into income.
Most company's work towards attaining a particular gross profit margin or bettering it. So in many cases, the selling price of the finished goods is determined based on the margin that the company wishes to attain by selling these goods.
Example: Let us say Mr.X manufactures leather belts and sells them to retail show-rooms. The cost that Mr.X incurs during the production of a single premium quality belt is Rs. 400/- He wishes to maintain a profit margin of 25% on his products. So the price he would sell his belts to his retailers is Rs. 500/-
Formula:
1. Gross Profit / Net Sales or
2. (Net Sales - COGS) / Net Sales
Profit made taking into account what it cost you to buy the items sold, but not any other expenses incurred.
E.G -
Item cost £10, sold for £20 = £10 gross profit, though it cost you £5 in fuel to deliver the item = £5 net profit.
The Gross Profit Margin is an expression of the Gross Profit as a percentage of the Revenue, where the Gross Profit is the Sales minus Cost of Sales. The Gross Profit Margin can be calculated in the following ways:
Gross Profit Margin = Gross Profit/Revenue*100
[or]
Gross Profit Margin = Revenue - Cost of Sales/Revenue*100
Gross margin or gross profit margin is the difference between the sales and the production costs of the company after excluding overhead, payroll, taxation, and interest payments. It expresses the relationship between gross profit and sales revenue. It is a measure of how well each rupee of a company's revenue is utilized to cover the costs of goods sold.
Higher gross margins for a manufacturer reflect greater efficiency in turning raw materials into income.
Most company's work towards attaining a particular gross profit margin or bettering it. So in many cases, the selling price of the finished goods is determined based on the margin that the company wishes to attain by selling these goods.
Example: Let us say Mr.X manufactures leather belts and sells them to retail show-rooms. The cost that Mr.X incurs during the production of a single premium quality belt is Rs. 400/- He wishes to maintain a profit margin of 25% on his products. So the price he would sell his belts to his retailers is Rs. 500/-
Formula:
1. Gross Profit / Net Sales or
2. (Net Sales - COGS) / Net Sales
Gross profit is profit earned from the core activities of the entity
the gross profit rate is calculated by dividing gross profit by net sales (Gross profit/Net Sales). This is a measure of the profitability of the company's products.
Gross profit is the amount of profit in dollars...gross margin is the % profit to expenses
Gross Margin = (Gross Profit/Sales)*100 Gross Profit = Sales - Cost of Sales Or in words, the Gross Margin is an expression of the Gross Profit as a percentage of Sales, where the Gross Profit is Sales minus the Cost of Sales.
Gross Profit/Net Sales = Gross Profit Margin.
Gross Margin = (Gross Profit/Sales)*100 Gross Profit = Sales - Cost of Sales Or in words, the Gross Margin is an expression of the Gross Profit as a percentage of Sales, where the Gross Profit is Sales minus the Cost of Sales.
Gross profit = sales - cost of good sold Gross profit margin = gross profit / sales *100 Gross profit = 240000- 108000 = 132000 Gross profit margin = 132000/240000 *100 Gross profit margin = 55%
The Gross Margin, also known as the Gross Profit Margin, is an expression of the Gross Profit as a percentage of the Revenue. It is calculated using the following: Gross Profit Margin = Gross Profit/Revenue*100 Looking at the input variables of the equation, it is clear that the factors that would affect the Gross Profit Margin would be the Gross Profit and the Revenue. What affects Gross Profit and Revenue would be an endless topic of it's own.
Gross Margin = (Gross Profit/Sales)*100 Gross Profit = Sales - Cost of Sales Or in words, the Gross Margin is an expression of the Gross Profit as a percentage of Sales, where the Gross Profit is Sales minus the Cost of Sales.
Gross Profit = Sales - Cost of goods sold Gross profit margin = gross profit / Sales
Gross Profit Margin = Gross Profit/Revenues Net Profit Margin = Net Profit/Revenues
The Gross Profit Margin is an expression of the Gross Profit as a percentage of Revenue. Gross Profit Margin = Gross Profit/Revenue*100 [or] Gross Profit Margin = Revenue - (Cost of Sales)/Revenue*100 Cost of sales=it include all those expenses and income that will occur during manaufacturing and sales of goods and services
The Gross Profit Margin = Gross Profit/Revenue*100 regardless of weather the Gross Profit is positive or negative (a loss). Therefor, it is acceptable to have a negative Gross Profit Margin.
gross margin ratio is calculated as >GROSS PROFIT/NET SALES