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Gross Profit Margin calculator

Gross profit margin is a key financial indicator used to asses the profitability of a company's core activity, excluding fixed cost. Gross Profit Margin formula is:

Gross profit margin formula

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Input   Result
Net Sales   Gross Profit Margin: 0.00 %
Cost of goods sold  
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Interpretation of Gross Profit Margin

Gross profit margin measures company's manufacturing and distribution efficiency during the production process. It is a measurement of how much from each dollar of a company's revenue is available to cover overhead, other expenses and profits.
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Definitions and terms used in the Gross Profit Margin calculator

  • Net Sales: the amount of revenue generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed.

    Net sales = Gross sales - Sales returns and allowances
  • Cost of Goods Sold (COGS): the direct cost attributable to the production or purchasing of the goods sold by a company. It is also referred as Cost of sales.
  • Gross Profit: the difference between Net Sales and its Cost of Goods Sold, before deducting overhead, payroll, taxes, interest and other operating expenses.

    Gross profit = Net sales - Cost of Goods Sold

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