Gross margin means after deduction of Direct Expense & Net margin means after deduction of Indirect expense its correct.?



1
Revenue - Direct Expense = Gross Margin

Gross Revenue - Indirect Expense = Net Margin

2 Answer(s)


2

Margin implies relative to the revenue..which means there should be Revenue in denominator while calculating any margin.

Gross Margin = (Revenue - COGS)/ Revenue

Net Margin = Net Profit/Revenue

where Net Profit= Revenue - COGS - Operating Expenses - Interests and Tax.

1

Sagar your formulas are right for Gross PROFIT and Net PROFIT.

Sandeeps forumulas are right for the corresponding margin calculations.

PROFIT is the number and MARGIN is the % exhibiting the PROFIT number as a % of revenue.

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