Gross Margin
What is Gross Margin?
Gross margin also Known by the Various Man like Gross profit margin or Gross Profit Rate. The Gross margin is the different among the sales and the production costs excluding overhead, payroll, taxation, and interest payments.
Gross Margin Percentage = (Revenue-Cost of goods sold)/Revenue
Gross margin can be determine as the amount of attempt to the business enterprise, after paying for direct-fixed and direct-varying unit costs, necessitate to cover overheads and allow for a buffer for anonymous items. Gross margin is also a measure of ratio. If a company has a higher gross margin than its equal it must either have separate its products so as to get a higher price or it must be more effective and have lower costs.
Gross Margin because it instantly tells you how many of your sales dollars are profit. Convince between gross margin and markup
Gross Margin (GM) = [Markup/ (1 + Markup)]
Examples:
Markup = 100%
GM = [1 / (1 + 1)] = 0.5 = 50%
Markup = 66%
GM = [0.66 / (1 + 0.66)] = 0.398 = 39.8%
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