G
- Gross Margin
- The difference between net sales revenue and the cost of goods sold (COGS) or Cost of Sales (COS)
Commonly referred to as gross profit and is usually expressed as a percentage as follows:
(100 * (Net Sales Revenue - Cost of Goods Sold) / Net Sales Revenue)
Therefore, $100 of net sales revenue with COGS of $50, results in a gross margin of 50%
Gross Margin is often measured on a unit of sales (unit gross margin) as well as a total gross margin for a given period
Gross Margin measures the ability of both to control costs and to pass along price increases through sales to customers and should be stable over time
A persistent gradual decrease is likely to indicate that productivity needs to be increased to return profitability back to previous levels