What is gross profit margin?
An example of an AI chatbot conversation about understanding gross profit margin.
What is gross profit margin?
Gross profit margin is a financial metric that shows the percentage of revenue that exceeds the cost of goods sold (COGS). It indicates how efficiently a company is producing its goods.
How do I calculate it?
To calculate gross profit margin, use the formula: (Gross Profit / Revenue) x 100. Gross Profit is Revenue minus COGS.
What is a good gross profit margin percentage?
A good gross profit margin varies by industry, but generally, a margin of 20% or higher is considered healthy.
Can you give me an example?
Sure! If a company has $200,000 in revenue and $150,000 in COGS, the gross profit margin would be: ((200,000 - 150,000) / 200,000) x 100 = 25%.
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