Lets take an example of the car company Honda. Whatever expense is incurred to the spare parts needed to make the car - engine, tires, steel, locks, windhsield, wipers etc are termed as Gross margin.
Apr 22 2013 12:47 PM
Other expenses that are not directly related to the car like salaries, rent, marketing expense, etc are operating expenses. So
Revenue - COGS = Gross Margin
Gross Margin - Opex = Net Margin