The Gross Margin
a business' gross margin is a rough gauge of how profitable its operations are. it measures how much sales revenue the company retains after all the direct costs associated with making a product or providing a service are accounted for. direct costs refer to materials, labor and expenses related to producing a product. overhead expenses such as management salaries and the cost of building a corporate headquarters are not direct costs. the greater a business margin, the more money it will have to invest in other important areas such as marketing and research. gross margin is generally quoted as a percentage of the company's sales. just take revenue generated for a given period, subtract the production expenses otherwise known as the cost of goods sold and divide this entire figure by revenue. let's take a look at rose candy company. the company earns annual revenue of $1,000,000 and has a cost of goods sold totaling $700,000. this gives the company a gross margin of 30%. this means that rose candy retains $0.3 from each $1 of total revenue made. say that rose candy's main competitor lily chocolate enjoys a margin of close to 40%. this could mean that lily chocolate has lower input cost such as raw materials and wages for its factory workers. it could also mean that lily chocolate gets away with selling in a higher prices by offering specialty items. in either case, rose candy will likely want to adjust its strategy to remain competitive in the long run. while it doesn't give an investor the whole picture when it comes to profitability, gross margin is extremely useful as a yardstick to make sure that a company is operating with maximum efficiency.
- gross margin・・・売上総利益→https://ja.wikipedia.org/wiki/%E5%A3%B2%E4%B8%8A%E7%B7%8F%E5%88%A9%E7%9B%8A