gross profit margin

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Related to Gross Margins: profit margin, Net Margins

Gross profit margin

Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold.

Gross Profit Margin

A measure of how well a company controls its costs. It is calculated by dividing a company's profit by its revenues and expressing the result as a percentage. The higher the gross profit margin is, the better the company is thought to control costs. Investors use the gross profit margin to compare companies in the same industry and well as in different industries to determine what are the most profitable. It is also called the profit margin or simply the margin.

gross profit margin

A measure calculated by dividing gross profit by net sales. Gross profit margin is an indication of a firm's ability to turn a dollar of sales into profit after the cost of goods sold has been accounted for. Also called gross margin, margin of profit. Compare net profit margin. See also return on sales.
References in periodicals archive ?
But firms with substantial gross margins, such as those with a 30% gross margin, only need to increase sales by about 3% to offset a 1% decrease in price.
Careful planning and forecasting are important tools so that levels of production and stock are enough to meet demand but not so high that the businesses have to offer a discount on unsold goods or throw out perishable stock after its sell-by-date, as this will also adversely impact gross margins.
Maximizing gross margins requires focus on the right drivers and alignment of these objectives by the senior management team to the front-line people closest to the action.
As a result, gross margins held steady year over year.
Subsidiaries of Foreign Companies before the Oversight Sub-Committee of the Ways and Means Committee, July 10, 1990 (testimony indicating that while some foreign controlled companies have adequate gross margins, they have excessive "below the line" expenses that require adjustments to the gross margin to reach appropriate levels of net profitability).