Revenue - Cost of Goods sold = Gross Margin
Mar 05 2013 10:58 PM
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.