margin percentage measures the relationship between net sales and cost
of goods sold.
percentage equals gross profit divided by net sales.
profit is sales minus cost of goods sold..
sales is total sales less any returns.
with your gross margin percentage
gross margin is a measure of sales profitability and represents what
portion of sales revenue is available to cover the other costs of running
your business and provide net profits. You can compare your gross margin
percentage with industry data to measure how your company compares to
competitors. Margins lower than competitors may be the result of lower
volume or higher costs.
monitoring changes in your gross margin percentage over time, you can
better understand the financial dynamics of your business and run it
more effectively. Here is a worksheet
you can use to track changes in this and other important measures.