What is the meaning of gross profit margin?
Gross profit margin, in layman’s terms, is the relationship between costs, sales volume and prices. It is the difference between the revenue (from net sales) and the total cost of goods sold. Gross profit margin shows the link between the price of an item, number of units sold and the cost incurred in producing each unit of item. According to Linda Pinson in the book “Anatomy of a Business Plan,” gross profit margin is the percentage of every sales dollar remaining after goods have been paid for by a business. It is the markup on the goods sold.
