Thursday, January 1, 2015

What is the difference between gross margin and net profit?

What is the difference between gross margin and net profit?
Gross Margin = (Gross Profit/Sales)*100

Gross Profit = Revenue - Cost of Sales

Net Profit = Revenue - Expenses

Or in words, the Gross Margin is an expression of the Gross Profit as a percentage of Sales, where the Gross Profit is Sales minus the Cost of Sales. The Net Profit, on the other hand, is Revenue minus ALL Expenses (including cost of sales).

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