Definition

Noun: - (Finance): A financial metric representing the percentage of revenue that exceeds the cost of goods sold (COGS). It is calculated as (Net Sales - Cost of Goods Sold) / Net Sales, and indicates the efficiency of a company in producing its goods or the margin available to cover operating expenses.

Usage

The term "gross profit margin" is used to analyze a company's financial health and operational efficiency. It is a key performance indicator (KPI) in business and finance. - It is typically expressed as a percentage. - It is used in financial statements, reports, and analysis.

Examples

• Noun:
  • The company's gross profit margin improved to 40% this quarter, indicating better cost control.
  • Analysts were concerned about the declining gross profit margin, which suggested rising production costs.
  • A high gross profit margin allows a business to invest more in research and development.

Advanced Usage

• "to maintain a healthy gross profit margin": To keep this profitability metric at a strong level.
  • The retailer's strategy is to maintain a healthy gross profit margin while competing on price.
• "gross margin analysis": The examination and interpretation of gross profit margin figures.
  • The quarterly review included a detailed gross margin analysis for each product line.

Variants and Related Words

• Gross Margin (n): A common synonym for "gross profit margin." The terms are often used interchangeably in finance.
  • The gross margin for the fiscal year was above industry average.
• Gross Profit (n): The absolute dollar amount of revenue minus cost of goods sold, not expressed as a percentage.
  • The company reported a gross profit of $5 million.

Synonyms

• Gross Margin: The ratio of gross profit to revenue.
• Profit Margin (Gross): Specifying the "gross" type of profit margin.

Related Terms and Contexts

• Operating Profit Margin: A profitability ratio calculated as operating income divided by revenue, which accounts for operating expenses beyond COGS.
• Net Profit Margin: A profitability ratio calculated as net income divided by revenue, representing the final profit percentage after all expenses and taxes.

Noun

1. (finance) the net sales minus the cost of goods and services sold