Gross Profit Margin

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Definition: Gross Profit Margin

Gross Profit Margin is the difference between the revenues and the cost of goods sold by the company. These costs include the direct fixed and variable costs incurred during production and exclude overhead costs, employee costs, interest payments and taxes etc.


Gross Profit Margin = Revenues – Cost of Goods sold (CoGS)


Gross Profit Margin indicates the contribution that the company has from its sales to cover its other overhead costs.




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