What is gross margin?

Gross margin is gross profit expressed as a percentage of revenue. It measures how efficiently a business produces or delivers its goods and services before accounting for operating expenses, taxes, and other costs.

Example: A business with $100,000 in revenue and $40,000 in cost of goods sold has a gross profit of $60,000 and a gross margin of 60%.

Related terms: Gross Profit, Revenue, Cost of Goods Sold (COGS), Income Statement