what is the meaning about gross margin & net margin



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I can see that video but i don't understand that about gross margin or net margin

7 Answer(s)


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Revenue - Cost of Goods sold = Gross Margin
Gross Margin - Operating Expense = Net Margin
Gross MArgin is the profits the company makes after you subtract the raw material cost from the revenue. For example while making pizza, ingredients like cheese, vegetables etc are raw materials.

From Gross margin if you subtract oterh day to day expenses like electricity, salary etc you get net income.

When people say a company is profitable or loss making they are referring to net income.

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Gross margin is the difference between revenue and cost before accounting for certain other costs (i.e. Gross Margin= Revenue- Cost of goods sold). The levels of gross margin can vary drastically from one industry to another depending on the business. Taking example from the video, software companies will generally have a much higher gross margin than a manufacturing firm.
Net Margin= Gross Margin- Operating Expense. Most publicly traded companies will report their net margins both quarterly and in their annual reports. Companies that are able to expand their net margins over time will generally be rewarded with share price growth, as it leads directly to higher levels of profitability.

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Gross margin is the Gross income expressed as a percentage of revenue and gross income is calculated by subtracting the cost of goods sold from revenue.

Net margin is the net income expressed as the percentage of revenue and net income is calculated by deducting selling, general and administrative expenses, interest payments and taxes from gross income

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The gross margin represents the total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company.Gross Margin= Revenue- Cost of goods sold
Net margin is calculated by deducting selling, general and administrative expenses, interest payments and taxes from gross income
Net Margin= Gross Margin- Operating Expense.

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gross margin is ur revenue less cost of goods. net margin is actually real income we get in business .this includes operating expenses, tax,interest which are subtracted from gross margin

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Gross Margin = Revenue - COGS ( Cost of goods sold)
Net Margin = Net Profit / Net Revenues ( shown as a percentage)

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The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company.
Gross margin can be calculated by taking revenue from COGS and dividing it by revenue

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