Learn about gross, operating, and net profit margins, how each is calculated, and how businesses and investors can use them to analyze a company’s profitability.

A. The short answer to your question is “yes!” However, a bit of explanation may be helpful. Gross margin is defined as revenue, minus the cost of goods sold (COGS) or the cost of services provided.

When a company sells a product or offers a service, it needs to price it higher than it costs to produce it. That amount is the gross income a company earns from its sales. But it’s often simpler and ...

Gross margin, often referred to as gross profit margin, is a key financial metric used to evaluate a company’s profitability and operational efficiency. It’s calculated by deducting the total cost of ...

Gross margin is a ratio a company uses to determine how much money remains after deducting the cost of goods from the revenue it earns. Scrutinizing the numbers is a way for a company to find out if ...

In my book Great CEOs Are Lazy, I discussed the elements of a great business model. One of the most critical elements of any good business model is margin–specifically gross margin. Lots and lots of ...

Gross profit margin, operating profit margin, and net profit margin are the three main margin analysis measures that are used to analyze the income statement activities of a firm. Each margin ...

Pricing products is probably one of the most difficult things a business owner has to do. The selling price of the product must be high enough to cover costs and make a profit and yet not so high that ...

QUESTION: I own a small business and have been told that I need to pay close attention to gross margin. What is your perspective? Should I focus on gross margin? ANSWER: The short answer to your ...

I’ve mentioned before that your gross profit is your real revenue. It is your true top line. Revenue is vanity. It is what we like to brag about at cocktail parties. Gross profit is the economic ...

When it’s time to calculate your tax bill, knowing your adjusted gross income (AGI) is a crucial first step. If you file your tax return online (or have your tax preparer do it), you’ll need your AGI ...