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# Gross Margin

Fundamental Analysis Term

Gross margin is a financial metric used by businesses to determine the profitability of their products or services. It is a measure of the difference between the revenue generated by sales and the cost of goods or services sold. Gross margin is expressed as a percentage of revenue and is usually calculated on a periodic basis.

Gross margin is one of the key metrics used in Fundamental Analysis, which is a method of evaluating the intrinsic value of a company by examining its financial and economic data. It helps investors and analysts to understand the profitability of a company and how efficiently it is conducting its operations.

The formula for calculating gross margin is:

Gross Margin = ((Revenue - Cost of Goods Sold) / Revenue) n 100%

In this formula, revenue represents the total amount of money earned by a company from sales. Cost of goods sold refers to the direct costs associated with producing or providing goods or services for sale. These costs include materials, labor, and overhead expenses.

For example, if a company generates \$100,000 in revenue from sales and has \$60,000 in cost of goods sold, its gross margin would be:

((100,000 - 60,000) / 100,000) n 100% = 40%

This means that the company retains 40 cents in profit for every dollar of revenue earned, after accounting for the cost of goods sold. Higher gross margins indicate greater profitability, while lower gross margins may suggest inefficiency or competition from other companies offering similar products or services.

# Gross Margin

Fundamental Analysis Term

Gross margin is a financial metric used by businesses to determine the profitability of their products or services. It is a measure of the difference between the revenue generated by sales and the cost of goods or services sold. Gross margin is expressed as a percentage of revenue and is usually calculated on a periodic basis.

Gross margin is one of the key metrics used in Fundamental Analysis, which is a method of evaluating the intrinsic value of a company by examining its financial and economic data. It helps investors and analysts to understand the profitability of a company and how efficiently it is conducting its operations.

The formula for calculating gross margin is:

Gross Margin = ((Revenue - Cost of Goods Sold) / Revenue) n 100%

In this formula, revenue represents the total amount of money earned by a company from sales. Cost of goods sold refers to the direct costs associated with producing or providing goods or services for sale. These costs include materials, labor, and overhead expenses.

For example, if a company generates \$100,000 in revenue from sales and has \$60,000 in cost of goods sold, its gross margin would be:

((100,000 - 60,000) / 100,000) n 100% = 40%

This means that the company retains 40 cents in profit for every dollar of revenue earned, after accounting for the cost of goods sold. Higher gross margins indicate greater profitability, while lower gross margins may suggest inefficiency or competition from other companies offering similar products or services.

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